General Information
VAT Deregistration in the UAE
VAT deregistration is the formal procedure through which a VAT-registered business cancels its registration with the UAE Federal Tax Authority (FTA) once it is no longer required, or is otherwise eligible, to remain registered for VAT. This is particularly relevant when a company is ceasing operations, entering liquidation or being permanently dissolved. The cancellation of a UAE trade licence does not, by itself, terminate the company’s VAT registration. VAT deregistration is a separate regulatory procedure that must be completed through the FTA’s EmaraTax platform.
Until the VAT registration has been formally dealt with, the business may remain responsible for its continuing tax obligations, including the submission of applicable VAT returns, settlement of outstanding liabilities and responding to any FTA requirements
When Does a Business Need to Deregister for VAT?
VAT deregistration may be either mandatory or voluntary, depending upon the circumstances of the business and the conditions prescribed under UAE VAT legislation.
Mandatory VAT Deregistration
A business may be required to deregister where it no longer satisfies the conditions for remaining VAT registered.
- The business has permanently ceased making taxable supplies.
- Commercial operations have been discontinued and the company is being liquidated or dissolved.
- Taxable supplies have fallen below the relevant threshold and the statutory conditions for mandatory deregistration have been met.
- The nature or structure of the business has changed to the extent that VAT registration is no longer required.
- A cessation, restructuring or other material change means that the registrant no longer meets the conditions for VAT registration.
- Where deregistration becomes compulsory, an application should generally be submitted to the FTA within 20 business days from the date on which the obligation to deregister arose.
Mandatory and Voluntary VAT Deregistration
A reduction in turnover below the mandatory VAT registration threshold does not necessarily mean that a business must immediately deregister.
Where taxable supplies remain below AED 375,000 but above the applicable voluntary threshold, the business’s circumstances should be considered carefully before a deregistration application is submitted.
Businesses that originally registered voluntarily should also consider any applicable minimum registration period and other statutory conditions before seeking voluntary deregistration.
Accordingly, eligibility should be assessed by reference to the company’s historical taxable supplies, anticipated future activity and the circumstances giving rise to the proposed deregistration.
- Mandatory Registration Threshold - AED 375,000
- Voluntary Registration Threshold - AED 187,500
VAT Deregistration When Closing a UAE Company
- VAT deregistration should form an integral part of the overall company closure strategy.
A common misconception is that:
Trade Licence Cancellation = Automatic VAT Deregistration
This is not the case.
The company’s commercial registration and its tax registration with the FTA are administered separately. A business entering liquidation may therefore need to manage several parallel closure procedures, including:
Company Liquidation → Trade Licence Cancellation → VAT Deregistration → Corporate Tax Deregistration
Each procedure has its own requirements, supporting documentation and applicable deadlines. The FTA may also request evidence establishing that the business has ceased trading or otherwise satisfies the conditions for VAT deregistration.
Documents Commonly Required for VAT Deregistration
The documentation required will depend upon the reason for deregistration and the particular circumstances of the business.
- * Trade licence and/or evidence of licence cancellation
- * Certificate of Incorporation, where applicable
- * Shareholder or board resolution approving the closure
- * Liquidation documentation, where applicable
- * Supporting evidence confirming cessation of business activities
- * Latest available financial statements
- * Profit and Loss Statement
- * Balance Sheet
- * Trial Balance, where applicable
- * Turnover schedules and supporting calculations
- * Bank statements or other financial evidence where requested
- * Tax Registration Number (TRN)
- * VAT Registration Certificate
- * Previously submitted VAT returns
- * Details of outstanding VAT liabilities or credits
- * Relevant FTA correspondence
- * Supporting declarations or undertakings where requested
The FTA retains the right to request additional documentation, explanations or financial information when reviewing a deregistration application.
The VAT Deregistration Process
1. Establish the Grounds for Deregistration
The first stage is to determine whether deregistration is mandatory or voluntary and establish the precise reason upon which the application will be made.
Where deregistration is compulsory, particular attention should be given to identifying the date on which the obligation arose, as this determines the applicable filing deadline.
2. Review the Company’s Existing VAT Position
Before an application is submitted, the company’s VAT affairs should be reviewed comprehensively.
This should include consideration of:
- * Outstanding VAT returns
- * Unpaid tax liabilities
- * Existing administrative penalties
- * Errors or inconsistencies within previous VAT returns
- * Outstanding FTA correspondence
- * VAT credit balances
- * Potential voluntary disclosures
- * Any unresolved compliance matters
Addressing such matters at an early stage can considerably reduce complications during the FTA’s review.
3. Prepare the Supporting Financial Records
The business should compile sufficient evidence to substantiate its eligibility for deregistration.
Where turnover is relevant, financial records may be required to demonstrate the level of taxable supplies made during the applicable period.
For companies that have ceased operations, evidence confirming the cessation or closure of the business may be particularly important.
4. Submit the Deregistration Application Through EmaraTax
The application is submitted electronically through the company’s EmaraTax account.
The applicant must access the relevant Taxable Person profile, proceed to the VAT registration section and select the applicable deregistration service.
The application will ordinarily require details concerning:
- * The reason for deregistration
- * Relevant effective dates
- * Business and financial information
- * Taxable turnover
- * Supporting documentation
- * Details relating to the cessation or continuation of activities
Accuracy at this stage is important, as inconsistencies between the application and the company’s previous VAT filings can result in additional queries.
5. FTA Assessment of the Application
Once a complete application has been submitted, it is reviewed by the Federal Tax Authority.
The FTA currently indicates an estimated processing period of approximately 20 business days for a completed application.
This should be regarded as an indicative processing period rather than a guaranteed completion date.
Where further clarification or documentation is required, the FTA may issue an information request. Additional review time may then be required following submission of the requested information.
6. Resolve Outstanding VAT Matters
Deregistration does not extinguish tax liabilities that arose whilst the company remained VAT registered.
Before the VAT account can be fully concluded, the business may therefore need to address:
- * Outstanding VAT returns
- * VAT payable to the FTA
- * Administrative penalties
- * Corrections to previous filings
- * Voluntary disclosures, where appropriate
- * Other unresolved compliance matters. The company’s EmaraTax account should continue to be monitored until the deregistration procedure has been formally completed.
7. Complete the Final VAT Return
The company will ordinarily be required to account for VAT relating to its final tax period.
The final VAT return and any resulting tax liability should generally be submitted and settled within 28 days from the effective date of deregistration, in accordance with the applicable requirements.
The final return should be reviewed carefully, particularly where the company holds assets, inventory or other items upon which input VAT was previously recovered.
Treatment of Assets Upon Closure
The VAT consequences of assets remaining within a business at the point of closure should not be overlooked. Depending upon the circumstances, the company may need to consider the VAT treatment of assets such as:
- * Trading stock and inventory
- * Office furniture
- * Computers and electronic equipment
- * Vehicles
- * Machinery
- * Tools and operational equipment
- * Other business assets upon which input VAT was previously recovered
Certain circumstances may result in deemed supply or VAT adjustment considerations. The appropriate treatment will depend upon the nature of the assets, how they were acquired, whether input VAT was recovered and what happens to those assets upon closure.
Receiving the VAT Deregistration Certificate
Following approval by the FTA, evidence of the completed VAT deregistration should be available through the taxpayer’s EmaraTax account.
The VAT Deregistration Certificate or confirmation should be retained securely with the company’s accounting, tax and liquidation records.
It provides important evidence that the company’s VAT registration has been formally concluded.
Penalties for Late VAT Deregistration
| Period of Delay | Cumulative Penalty |
|---|---|
| Initial delay | AED 1,000 |
| 2 months | AED 2,000 |
| 3 months | AED 3,000 |
| 4 months | AED 4,000 |
| 5 months | AED 5,000 |
| 6 months | AED 6,000 |
| 7 months | AED 7,000 |
| 8 months | AED 8,000 |
| 9 months | AED 9,000 |
| 10 months or more | AED 10,000 maximum |
Where VAT deregistration is mandatory, failure to submit the application within the prescribed period can result in an administrative penalty. The applicable penalty is AED 1,000 upon delay, followed by AED 1,000 on the same date in each subsequent month, subject to a maximum of AED 10,000.
This penalty relates specifically to a delay in submitting a mandatory deregistration application. Other VAT compliance failures — including late returns, unpaid tax, incorrect declarations or other breaches — may result in separate administrative penalties and tax liabilities.
Important UAE VAT Figures at a Glance
| Requirement | Figure |
|---|---|
| Standard UAE VAT Rate | 5% |
| Mandatory VAT Registration Threshold | AED 375,000 |
| Voluntary VAT Registration Threshold | AED 187,500 |
| Mandatory Deregistration Application Deadline | 20 business days |
| Indicative FTA Processing Period for a Complete Application | Approximately 20 business days |
| Final VAT Return / Payment Deadline | 28 days from the effective deregistration date |
| Late Mandatory Deregistration Penalty | AED 1,000 per month |
| Maximum Late Deregistration Penalty | AED 10,000 |
Common VAT Deregistration Mistakes
VAT Deregistration Checklist
Before considering the company’s VAT affairs concluded, the following points should be confirmed:
- * The grounds for VAT deregistration have been established.
- * It has been determined whether deregistration is mandatory or voluntary.
- * The relevant effective date has been identified.
- * The 20-business-day deadline has been considered where applicable.
- * Financial and turnover information has been prepared.
- * Supporting closure documentation is available.
- * Previous VAT returns have been reviewed.
- * Outstanding returns have been submitted.
- * Outstanding VAT liabilities and penalties have been identified and addressed.
- * Remaining company assets have been considered for VAT purposes.
- * The deregistration application has been submitted through EmaraTax.
- * Any subsequent FTA information requests have been answered.
- * The final VAT return has been completed where required.
- * Final VAT liabilities have been settled.
- * FTA approval has been obtained.
- * Evidence of VAT deregistration has been downloaded and retained.
A Properly Managed VAT Exit Matters
VAT deregistration should not be regarded simply as the final administrative task after a company has ceased trading. It should form part of the wider closure and liquidation strategy from the outset.
The company’s trade licence, accounting records, VAT returns, outstanding tax liabilities, remaining assets and liquidation documentation should be considered collectively so that the various closure requirements can be managed in the correct sequence.
A properly completed deregistration establishes a clear conclusion to the company’s VAT registration and provides documentary evidence that its VAT position with the Federal Tax Authority has been formally addressed.
How Connect Us Can Assist
Connect Us can support and coordinate the VAT deregistration process as part of a wider UAE company closure or liquidation engagement.
Our role can include reviewing the available documentation, identifying outstanding requirements, coordinating the preparation of the deregistration file and assisting with the administrative process.
Where the wider liquidation requires a statutory audit, Liquidation Audit Report or another regulated professional service, Connect Us does not issue such reports directly. These services are coordinated through independent, appropriately licensed and authorised professional firms in the UAE, with the relevant professional remaining responsible for the regulated work and any report or opinion issued.
This provides businesses with a coordinated approach to company closure, whilst ensuring that specialist and regulated services remain with the appropriately qualified professionals.