VAT De-Registration in the UAE: A Complete Legal Guide, Thresholds & Compliance Obligations

Introduction

VAT compliance in the UAE does not end with registration.
In many cases, businesses must also de-register for VAT when they no longer meet legal requirements.

VAT de-registration is a mandatory legal process, not a choice.
Failing to apply on time can lead to penalties and FTA audits.

This complete guide to VAT de-registration in the UAE explains:

• When VAT de-registration is required
• Mandatory vs voluntary thresholds
• Step-by-step process with timelines
• Compliance obligations after de-registration
• Common mistakes businesses must avoid

This article is designed for SMEs, startups, free zone companies, and mainland businesses.

What Is VAT De-Registration in the UAE?

VAT de-registration is the formal process of cancelling a business’s VAT registration with the Federal Tax Authority (FTA).

Once approved:

• The business must stop charging VAT
• VAT returns must no longer be filed
• VAT TRN becomes inactive

However, de-registration does not remove past liabilities.
All previous VAT obligations remain enforceable.

Legal Framework for VAT De-Registration in the UAE

VAT de-registration is governed by:

• Federal Decree-Law No. 8 of 2017 (UAE VAT Law)
• Cabinet Decision No. 52 of 2017
• FTA VAT Public Clarifications and Guidelines

The law clearly states that eligible businesses must apply within 20 business days of meeting de-registration conditions.

Failure to comply results in administrative penalties.

Types of VAT De-Registration in the UAE

VAT de-registration falls into two main categories:

1. Mandatory VAT De-Registration

Mandatory de-registration applies when a business must cancel its VAT registration.

This occurs if:

• Taxable turnover falls below AED 187,500 in the last 12 months
• The business ceases all taxable activities
• The company is liquidated or closed
• Trade license is cancelled

The application must be submitted within 20 business days.

2. Voluntary VAT De-Registration

Voluntary de-registration applies when a business chooses to de-register.

This is allowed if:

• Taxable turnover is below AED 375,000
• The business does not expect future taxable supplies
• The company is restructuring operations

FTA approval is required.
The authority may reject the request if future VAT liability exists.

VAT De-Registration Thresholds in the UAE

Understanding thresholds is essential to avoid penalties.

When Should You Apply for VAT De-Registration?

You must apply within 20 business days from:

• The date taxable turnover drops below threshold
• The date business activity stops
• The trade license cancellation date

Late applications attract penalties even if VAT returns are nil.

Step-by-Step VAT De-Registration Process in the UAE

Step 1: Login to FTA Portal

Access your VAT account using registered credentials.

Step 2: Select VAT De-Registration

Choose “VAT De-Registration” from the dashboard.

Step 3: Provide Reason for De-Registration

Select:

• Business closure
• Turnover below threshold
• Voluntary request

Step 4: Upload Supporting Documents

Required documents include:

• Financial statements
• VAT returns
• Trade license cancellation (if applicable)

Step 5: Submit Application

FTA reviews the request within 20-40 business days.

Final VAT Return After De-Registration

A final VAT return is mandatory.

It must include:

• Output VAT till last taxable date
• Input VAT adjustments
• Capital asset adjustments

This return must be filed within 28 days of de-registration approval.

Compliance Obligations After VAT De-Registration

Even after de-registration, businesses must:

• Maintain VAT records for 5 years
• Respond to FTA audits
• Pay outstanding VAT or penalties
• Submit clarifications if requested

Non-compliance can lead to re-registration or legal action.

Common VAT De-Registration Mistakes to Avoid

Many businesses face issues due to these errors:

• Missing the 20-day deadline
• Assuming de-registration is automatic
• Ignoring capital asset adjustments
• Not filing the final VAT return
• De-registering despite future taxable income

Professional guidance prevents costly errors.

VAT De-Registration for Free Zone Companies

Free zone companies must also de-register if:

• They are VAT registered
• Taxable supplies are no longer made

Being in a free zone does not exempt a business from VAT compliance.

Best Practices for Smooth VAT De-Registration

To ensure approval:

• Reconcile VAT returns before applying
• Clear all VAT liabilities
• Prepare financial records accurately
• Seek professional review before submission

This reduces rejection and audit risk.

Why Professional Support Matters

VAT de-registration seems simple but involves technical tax assessments.

Expert support helps with:

• Threshold analysis
• Final VAT computation
• Asset adjustment calculations
• FTA communication

This ensures risk-free compliance.

 Conclusion

VAT de-registration in the UAE is a legal obligation, not an option.
Understanding thresholds, timelines, and compliance rules is critical.

Incorrect handling can result in penalties, audits, and reputational risk.If your business is considering VAT de-registration, expert guidance ensures a smooth, compliant exit from the VAT system.