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.
In this case study, we will have an overview and a detailed study on VAT Deregistration in the UAE.
Company Al Khaleel LLC (hereinafter referred to as “the company”) applied for VAT Registration in the UAE on “mandatory basis” on 2nd December 2018 and got the Tax Registration Certificate from the Federal Tax Authority on 20th December 2018. Few months after registration, in April 2019 the management decided to liquidate the company. In this regard, what will be the answer in the following cases:
What would be the answer in the above cases if the company does not liquidate? Let us understand the relevant provisions in the UAE VAT Law for VAT Deregistration in the UAE.
Since the company Al Khaleel LLC decided to liquidate, it is evident that they have stopped making taxable supplies. Hence, the company Al Khaleel LLC should apply for de-registration in all the three scenarios as per Article 21(1) of the Decree-Law.
Therefore, the company should apply for deregistration as per the provisions of Article 21(2) of the Decree-law. And the application for deregistration should be made within 20 business days from the date of on which the taxable supplies fall below AED 187,500/-.
A Registrant shall apply to the Authority for Tax Deregistration in any of the following cases:
As per the guidelines issued by the Federal Tax Authority (FTA) 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 de-registration penalty of AED 10,000/- 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.
Mr. Pradeep Sai
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