How to Cancel VAT Registration in UAE?

Cancelling VAT registration is now a normal part of tax housekeeping for many small UAE firms. The key is to check the thresholds, understand the timing rules and follow the EmaraTax steps carefully so deregistration does not trigger avoidable penalties.

The rules for VAT Registration in UAE sit inside the Federal Decree-Law on VAT and the FTA’s registration and deregistration service cards. These set a 375,000 AED mandatory registration threshold and a 187,500 AED voluntary registration threshold for most resident businesses. 

Let’s know how to cancel VAT registration in the UAE in detail.

When Can a Business Cancel VAT Registration in UAE?

Before thinking about how to cancel VAT registration in UAE, a firm has to check if it actually qualifies for deregistration.

Typical situations include:

• The business has stopped making taxable supplies and does not expect to make any in the next 12 months.
• Over the last 12 months, taxable turnover has dropped below the 187,500 AED voluntary threshold, meaning the firm no longer meets even the lower limit for registration.
• A voluntarily registered business has stayed in the system for at least 12 months and wants to exit because it no longer benefits from input VAT recovery.

Important Advice: The FTA will usually not approve deregistration while there are unpaid VAT returns, unpaid tax, or penalties linked to the Tax Registration Number (TRN).

Documents and Pre Checks Before Applying

An application to cancel VAT registration needs more than a simple online form. The FTA expects evidence that the firm now sits below the relevant thresholds or has ceased taxable activities.

Before starting EmaraTax steps, finance teams normally:

• Prepare a 12-month turnover schedule showing taxable supplies and imports, so the position against the 187,500 AED and 375,000 AED thresholds is clear.
• Pull recent VAT returns and payment confirmations to check that all filing obligations are met and no liabilities remain open.
• Update the trial balance and profit and loss statement so the FTA can see the current business status if requested.

If the business has stopped trading, it usually helps to have trade licence updates and contract closure letters ready, in case the FTA asks why taxable supplies have ended.

Need assistance in preparing these documents? Hire professional VAT De-registration services in UAE to ensure the entire process remains smooth.

Step By Step: How to Cancel VAT Registration Online

Most firms now cancel VAT registration through the EmaraTax portal instead of sending paper forms.

Here’s 4 simple steps about how to cancel VAT registration online:

• Log in to EmaraTax and select the VAT registration account linked to the TRN. The portal is accessed with normal credentials or UAE Pass.
• On the VAT tile, use the Actions menu and choose the Deregister option to open the VAT deregistration form.
• Answer questions on the reason for deregistration, the last day of taxable supplies and expected turnover, then upload the supporting documents requested on the service card.
• Confirm authorised signatory details, review the summary and submit the request. A reference number appears for later tracking.

The current guidance states that a registrant should apply for VAT deregistration within 20 business days of becoming eligible, such as the date supplies stopped or turnover fell below the threshold. Late applications attract a 10,000 AED penalty.

Wanna ensure the entire process remains smooth?

Returns and Penalties After Deregistration

Submitting the form does not instantly end obligations. The FTA first reviews the application and may ask for extra invoices, contracts or ledgers before approving deregistration.

Once approval is granted, the business usually has to file a final VAT return covering the period up to the effective deregistration date. Any VAT due must be paid in full, including on deemed supplies where assets are kept for non-business use.

Tax invoices, contracts and accounting records must still be retained for the normal record-keeping period under UAE tax procedure rules, even after the TRN is cancelled.

If the company later passes the registration thresholds again, a fresh VAT registration may be required, based on the same 375,000 AED mandatory and 187,500 AED voluntary thresholds used before deregistration.

How Arnifi Helps with VAT Deregistration in UAE

VAT deregistration sounds simple but often sits on top of messy ledgers, old returns and unclear turnover history. Arnifi helps UAE businesses test threshold conditions, reconcile EmaraTax profiles with books and prepare evidence packs that match FTA service card expectations. 

We take care of the entire VAT de-registration process in UAE through the online form, final return and clearance steps so VAT deregistration becomes a clean, low risk transition without inviting any penalties for the business.

FAQs

Q1. When is VAT deregistration mandatory in the UAE?

VAT deregistration is generally mandatory when a taxable person stops making taxable supplies and does not expect to restart within 12 months. It also applies when turnover falls below the voluntary threshold of AED 187,500 and the person no longer needs to stay registered.

Q2. How long does a business have to apply for VAT deregistration?

A registrant should file the deregistration application within 20 business days of becoming eligible. If that deadline is missed, the FTA may levy a late deregistration penalty currently set at AED 10,000.

Q3. Can a voluntarily registered business deregister within the first year?

Guidance notes state that voluntarily registered businesses are usually expected to stay registered for at least 12 months before applying for deregistration. An exception applies where the business fully ceases taxable activities earlier.

Q4. What happens to input VAT on assets when cancelling registration?

When deregistering, input VAT previously claimed on assets may need adjustment if those assets are kept for non-business use, as they can be treated as deemed supplies in the final VAT period.

Q5. Does deregistration remove old VAT record keeping duties?

No. Even after VAT deregistration, UAE law still requires businesses to keep tax invoices, ledgers and related documents for the standard retention period set under tax procedure rules, in case of future audits.