Why and When a Business Should Deregister for VAT?

There are circumstances when VAT registration may not be in the best interest or required for businesses operating in the UAE, while there is a legal requirement for the registration regarding VAT for entities whose revenues exceed a specific threshold; at times, deregistration concerning Value Added Tax becomes necessary. The following discussion gives an insight into when and why it would be apt to consider VAT deregistration, common mistakes, and how we can assist in simplifying this process with our services in Dubai.

When Should a Business Deregister for VAT?

Revenue Drops Below Threshold

If the taxable turnover of the business drops below the compulsory threshold of AED 375,000, then one will be allowed to make an application for voluntary deregistration.

It covers companies which have scaled down operations, downsized, or moved to markets that do not require VAT registration.

Business Closure or Ceasing Activities

A business has a mandate to deregister for VAT when it closes its operation or ceases to carry out the taxable activities since there will be no need to comply with this area.

Examples include liquidation, mergers, and businesses that will no longer be subject to the VAT regime.

Transfer of Ownership

If there is a change in ownership or any other cases relating to mergers or acquisition, the VAT registration is rendered invalid. New management would be expected to deregister.

Deregistration Deadline

UAE VAT law requires business entities to apply for deregistration within 20 business days, commencing with the date the occurrence has been identified. Failure to do this will attract penalties.

Why Deregister a Business from VAT?

Less Compliance Hassle

Retention of VAT registration involves filings every month or quarter, audits, and keeping books of accounts accurate. If the operation no longer requires a VAT, deregistration reduces compliance burdens and associated costs.

Avoid Penalties

If one is not required to be registered, failure in filing for de-registration may invite administrative penalties at the FTA. It helps avoid such unwanted penalties.

Increase Cash Flow

In case the cash flow is thin for small businesses, deregistration saves the business from paying VAT on supplies and lessens the financial burdens.

Common Mistakes During VAT Deregistration in the UAE

Application Beyond the 20-Day Grace Period

Failure to apply for deregistration within the time limit attracts penalties from the FTA amounting to AED 10,000 or more.

Insufficient Documents

This is one of those very common mistakes: incomplete or incorrect submission of documents. It so happens that the final returns or proof of proper closure of activity is not attached by the business that delays the process of your application.

Not settling outstanding VAT: companies need to clear all the outstanding VAT payments and file final returns before applying for deregistration. The majority of the businesses do not consider this step which leads to an application rejection.

Wrong eligibility assumption: a business may be wrong in assuming the eligibility for deregistration without properly screening criteria which might result in application rejection with additional fines.

How Our VAT Deregistration Services in Dubai Make Everything Easy

Deregistration is often complicated, with deadlines and procedures to be followed. Our Dubai VAT Deregistration Services include the following: Eligibility Assessment We scrutinize your business activities and books of accounts to see whether you are qualified for deregistration in accordance with the FTA. Accurate Documentation and Submission Our professionals take care of all paperwork relating to deregistration and prepare and submit all required documents and returns correctly so that there is no delay or rejection. Clearing Outstanding VAT

We assist you in settling your VAT liabilities and ensure your final return filling is taken precisely.

FTA Compliance

We always stay updated on new guidelines provided by the FTA that will help us in the compliance process and also make your de-registration smooth. Complying with these guidelines, we eventually follow up with authorities to pursue the processes of deregistration as quickly as possible.

Conclusion

Deregistration from VAT is required when and for what reason; this will ensure that the businessman in UAE is well-informed to avoid unnecessary penalties and costs of compliance. It may be time for scaling down, closure of operation, or shift of business activities. Whatever the case may be, timely deregistration will keep you compliant with tax laws. At the same time, certain errors, such as failure in meeting deadlines or partial/incorrect submission of documentation or unpaid VAT on account of the registration, complicates the process.

Our VAT deregistration services in Dubai allow assistance to be provided comprehensively, right from ensuring that your business deregisters on time and without any hiccups. By allowing us to handle the intricacies of VAT deregistration, you can then concentrate on your business operations.