VAT Compliance

VAT De-registration

What is VAT De-Registration?

VAT De-registration is a process wherein the registered firm applies for the cancellation of its registration. VAT De-registration is required when any taxable business no more exists or no more requires registration.

De-registration of VAT means de-activation of the registration and the VAT number of the firm. Whenever a business stops trading or no longer deals with taxable goods and services, it can cancel its VAT number. We have explained here the need and formalities for VAT de-registration.

Who Can Request Voluntary De-registration

If a trader no longer deals with the taxable goods, he should request the tax authorities for de-registration. Also, if the value of the taxable goods and services does not exceed the prescribed threshold. Currently, the prescribed threshold for VAT implementation is annual revenue above AED 375,000.

Voluntary VAT De-Registration

A person or a firm is can opt for voluntary registration if tax authorities are satisfied with the request for VAT De-registration. The tax authorities approve de-registration if they are satisfied with the reason for the cancellation of VAT registration. The valid reason shown by the firm will be verified by the tax authorities before approving the voluntary de-registration.

Mandatory De-Registration of VAT

Mandatory de-registration occurs when the tax authorities themselves cancel the VAT number of any firm. If the authority verifies that the firm is neither making taxable supplies nor intends to do so, it mandatorily de-registers the firm. VAT registration is also transferable with the transfer of business.

If the business is transferred to a non-taxable firm, the VAT number can also be transferred to the new owner. In the case of transfer of the business, VAT de-registration is not required. However, VAT de-registration is more recommended instead of transferring the VAT number.

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