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Majority of businesses in UAE which meet the criteria for registration under VAT have already registered by now. A registered taxable person is required to comply with the required rules and processes under VAT. Invoices have to be issued in the specified format, returns need to be filed on a timely basis and the tax due needs to be paid by the due date. The VAT Law provides registered taxable persons with the facility to cancel their VAT registration. Let us understand the circumstances in which a person can de-register under VAT and the process to be followed for the same.
Tax De-registration is the provision for a registered taxable person to cancel his/her VAT registration. It means de-activation of the registration and the VAT number of the taxable person. Tax de-registration can be applied for by a person registered under VAT or done by the FTA on finding that a person meets the conditions for de-registration.
A person registered under VAT can apply for Tax De-registration in the following 2 cases:
Note that a person who has voluntarily registered under VAT cannot apply for de-registration in the 12 months following the date of registration.
The process for de-registering under VAT is shown below:
The FTA can cancel a person’s registration if it is found that the registrant satisfies either of the 2 conditions listed above for de-registration. This is called mandatory tax de-registration.
Hence, VAT de-registration is a welcome option for persons who have registered under VAT but do not continue to make supplies requiring registration. Such persons do not need to continue being registrants and can apply for tax de-registration on satisfying the applicable conditions.