Tax & compliance
VAT deregistration
Mandatory when you stop making taxable supplies or fall below the voluntary threshold, with a twenty-business-day deadline and a penalty for missing it.
The rule
What the law actually requires.
A registrant must apply to deregister for VAT where it ceases making taxable supplies, or where its taxable supplies over the previous twelve months fall below the voluntary registration threshold of AED 187,500. The application is made through EmaraTax, generally within twenty business days of the event giving rise to it. Deregistration cannot complete while returns are outstanding or liabilities unpaid, and a final return covering the period to deregistration is required.
Deregistration also triggers a consequence people forget: VAT previously recovered on assets still held at the point of deregistration may have to be accounted for as a deemed supply. A company that reclaimed input VAT on a fit-out, on equipment or on stock, and still holds those assets when it deregisters, may owe VAT on their value at that point. For a business winding down with significant capital assets on the balance sheet this is a real liability arriving at the least convenient moment, and it should be modelled before the closure timetable is fixed.
Thresholds and deadlines
- Mandatory trigger
- Ceasing taxable supplies, or falling below AED 187,500
- Deadline
- Generally 20 business days from the triggering event
- Prerequisite
- All returns filed and liabilities settled
- Final return
- Covering the period to deregistration
- Deemed supply
- VAT may be due on assets still held on which input tax was recovered
- Penalty
- Applies to late application
The compliance calendar
What to do
The filing, step by step.
- Identify the triggering event and its dateCessation of taxable supplies, or the point the rolling twelve-month figure fell below the voluntary threshold.
- Apply within the deadlineGenerally twenty business days. It is short and it is enforced.
- File all outstanding returnsDeregistration cannot complete with returns open.
- Calculate the deemed supply on retained assetsWhere input VAT was recovered and the assets are still held, VAT may be due on their value.
- Submit the final return and settleThen confirm the registration shows as deregistered rather than assuming.
Related
Questions
When you cease making taxable supplies, or when taxable supplies over the previous twelve months fall below AED 187,500.
Generally twenty business days from the triggering event. A penalty applies to late application.
Where input VAT was recovered on assets you still hold, a deemed supply can arise and VAT may be due on their value at deregistration.
No. All returns must be filed and liabilities settled before deregistration completes.
One question
Where are you with VAT?
The test is rolling rather than annual, which is why the obligation usually arises mid-year rather than at a year end. Above AED 375,000 of taxable supplies over any twelve months it is mandatory, and the thirty-day forward test can trigger it before you have invoiced anything.
The thresholds explainedOr just ask usThen the exposure is almost certainly input VAT rather than output. Claims without a valid tax invoice, entertainment, and personal-use vehicles are the three findings that come up on nearly every review, and the adjustment carries a penalty.
What gets disallowedOr just ask usDisclose it rather than hoping. The penalty on a voluntary disclosure is materially lower than on an error the FTA finds, and audits that uncover undisclosed errors tend to widen rather than close.
Voluntary disclosureOr just ask us