Under the UAE VAT Law, businesses and individuals who have applied for VAT in UAE under the Federal Tax Authority (FTA) can opt for VAT Deregistration in the UAE in two different Scenarios.
- If you have registered for and the minimum turnover AED 187,500/- has not exceeded in the next 12 months after you have registered for VAT with the , in such cases, you can apply for VAT Deregistration in the UAE
- If businesses and individuals have initially registered for VAT in the UAE with the FTA but gradually the business stops making taxable supplies, then in such cases as well you can apply for VAT Deregistration in the UAE.
Your Company applied for VAT Registration in the UAE on a “mandatory basis” on 2 December 2019 and got the Tax Registration Certificate from the FTA on 20 December 2019. A few months after registration, in April 2020 the management decided to liquidate the company. In this regard, what will be the answer in the following cases:
- Can the company apply for deregistration if the taxable supplies made by it for the past consecutive 12 months is more than AED 375,000/-?
- Can the company apply for deregistration if the taxable supplies made by it for the past consecutive 12 months is less than AED 375,000/- but more than AED 187,500?
- Can the company apply for deregistration if the taxable supplies made by it for the past consecutive 12 months is less than AED 187,500?
What would be the answer in the above cases if the company does not liquidate?
Let us know the relevant provisions in the UAE VAT Law for VAT Deregistration in the UAE.
Since your company decided to liquidate, it is evident that they have stopped making taxable supplies. Hence, your company should apply for de-registration in all three scenarios as per Article 21(1) of the Decree-Law.
- The application for deregistration should be submitted within 20 business days from the date the company stopped making taxable supplies.
- The Failure to apply with the FTA for deregistration and/or filing of final tax return or settlement of the payable tax within the deadline would be subject to administrative penalties.
- The company has made taxable supplies of more than AED 375,000/- over the past 12 consecutive months. Therefore, it cannot apply for deregistration from VAT.
- Since the taxable supplies made by the company over the last 12 consecutive months were less than AED 375,000/-. It can apply for deregistration as per the provisions of Article 22 of the Decree-law.
- Since the taxable supplies made by the company over the last 12 consecutive months were less than AED 187,500/- and the company does not expect that the total value of taxable supplies and imports subject to reverse charge provisions the expenses which are subject to tax that will be incurred, will not exceed the said AED 187,500/- during the coming 30-day period.
As per the guidelines issued by the Federal on registration, amendments; Deregistration, if the date of submission of the de-registration form is more than 20 business days from the date the Taxable Person is required to de-register then, a late will be levied by the Federal Tax Authority.
Accordingly, if the VAT deregistration application is approved, only then the Federal Tax Authority will cancel the VAT registration of the registrant and will deregister with effect from the last day of the Tax Period during which the Registrant has met the conditions for deregistration or from such other date as may be determined by the Federal Tax Authority.
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