Navigating the financial landscape of the UAE is crucial for any business. While most focus on VAT registration, knowing when and how to correctly process VAT de-registration (cancellation) is just as vital for compliance and avoiding hefty fines.
Whether your business is scaling down, shutting operations, or your taxable turnover has dropped, this comprehensive guide provides the clear steps and critical deadlines you need to successfully cancel your VAT registration with the Federal Tax Authority (FTA).
When is VAT De-registration Mandatory?
Not every business can simply choose to stop filing VAT returns. The UAE VAT Law specifies clear conditions under which applying for de-registration is mandatory or voluntary.
1. Mandatory De-registration (Must Apply within 20 Business Days!)
You must apply for VAT de-registration through the EmaraTax portal within 20 business days of the date you become eligible if:
- Cessation of Taxable Supplies: Your business stops making any taxable supplies and does not expect to make any over the next 12 months.
- Turnover Below Voluntary Threshold: The total value of your taxable supplies over the preceding 12 consecutive months has fallen below the Voluntary Registration Threshold of AED 187,500, and you do not expect your turnover to exceed this threshold in the next 30 days.
2. Voluntary De-registration (Optional)
You may apply for voluntary de-registration if:
- Turnover Below Mandatory Threshold: The total value of your taxable supplies over the preceding 12 consecutive months is above the Voluntary Threshold (AED 187,500) but below the Mandatory Registration Threshold of AED 375,000.
- Voluntary Registration Period: You initially registered for VAT voluntarily and have completed 12 consecutive months of registration, and no longer meet the conditions for voluntary registration.
Step-by-Step VAT De-registration Process via EmaraTax
The entire cancellation process is conducted through the official FTA EmaraTax portal.
- Log In to EmaraTax: Access your account using your credentials or UAE Pass.
- Initiate De-registration: On your dashboard, go to the VAT tile, click “Actions,” and select “Deregister.”
- Complete the Application Form:
- Select the Basis for Deregistration (e.g., turnover below threshold, business ceased).
- Enter the Eligibility Date for de-registration (the date you met the criteria).
- The system will auto-populate the effective de-registration date; you can provide justification if you require a different date.
- Provide details of your taxable supplies and expenses up to the eligibility date, often by downloading and uploading a required Excel template.
- Upload Supporting Documents: This is a critical step. Documents typically include:
- Cancelled Trade License or Business Closure Certificate (if applicable).
- Latest Financial Statements (Trial Balance, P&L) demonstrating turnover figures.
- Proof of cessation of business activity (if applicable).
- Review and Submit: Carefully review all details for accuracy. Once submitted, you will receive an acknowledgment and a unique reference number.
- FTA Review and Approval: The FTA will review your application and may request additional information.
- File Final VAT Return: Upon pre-approval, the FTA will generate a notification to file your final VAT return, covering the period up to the effective de-registration date.
- Settle Liabilities: Crucially, de-registration is only finalised once all outstanding tax liabilities, administrative penalties, and the final VAT return are fully settled.
- Receive Confirmation: Once all obligations are met, the FTA will issue the official VAT De-registration Certificate.
The Cost of Non-Compliance: Penalties to Avoid
Missing the mandatory deadline for de-registration can result in significant financial penalties.
| Violation | Administrative Penalty |
| Failure to apply for mandatory VAT De-registration within 20 business days | AED 10,000 |
| Failure to file a VAT Return on time | AED 1,000 (first offense), AED 2,000 (subsequent offenses within 24 months) |
| Failure to pay due tax on time | Escalating fines starting at 2% of unpaid tax, up to 300% of the unpaid amount |
Post-Deregistration Obligations
The process doesn’t end with the certificate. Ensure you:
- Record Keeping: You must retain all VAT-related business records, including invoices and tax returns, for a minimum of five years from the effective de-registration date.
- No More VAT Charging: After the effective date, you must cease charging VAT on all your supplies.
De-registration is an administrative process that requires precision and adherence to strict deadlines. If you are unsure about your eligibility or the required documentation, consulting with a certified Tax Agent or VAT expert is highly recommended to ensure a smooth, compliant transition and to avoid penalties.
How Finexus Advisory Can Help
At Finexus Advisory, our expert tax consultants provide comprehensive VAT registration, filing, and advisory services across the UAE. Whether you’re a start-up or an established company, we ensure that your VAT processes are accurate, compliant, and stress-free.
✅ VAT registration
✅ VAT De-registration
✅ VAT return filing
✅ VAT Health Check
✅ VAT Refund
✅ VAT Exception
If you are looking for professional Value Added Tax (VAT) services, contact us.
