Value Added Tax (VAT) is recently introduced in the UAE. It is a tax imposed on the use of products or services consumed at every point of sale. It is considered an indirect form of tax that is levied to almost 180 countries across the world.
The percentage of the VAT is initially kept 5% on all taxable supply of products and services. So, the businesses operating in the UAE are required to register for VAT in order to comply with the rules and regulations.
More importantly, there are three categories for including exempted, zero, and eligible to pay the VAT. Owing to the novelty of the concept for various local businesses, many companies look for the best VAT consultancy in Dubai to get through the process of paying VAT smoothly.
However, in any case, if you want to cancel your VAT registration, the blog is intended to provide you with a comprehensive guide.
- 1 All you need to know about VAT deregistration in the UAE
- 1.1 Phase 1: Consider the scope of the Application
- 1.2 Phase 2: Select Deregistration method
- 1.3 Phase 3: Process the Application
- 1.4 Need assistance for VAT deregistration?
All you need to know about VAT deregistration in the UAE
Every individual is required to align his business with the regulations imposed by the Federal Tax Authority. However, the registered businesses may require deregistration at any point. For example, if a registered business no longer operational or does not exist, then the owner of the business should cancel the registration. There may also be other reasons also. So, here is you VAT deregistration guide about A-Z process:
Phase 1: Consider the scope of the Application
The scope of the application varies depending on the individual VAT payers, or the tax is imposed on the group. It is therefore imperative to understand both:
VAT Deregistration Criterion for Individuals
The condition for persons is different because if a person does not posse taxable products or services while making no profit from anything is liable to deregister from VAT. Other individuals who possess taxable goods and services but the profitability does not match the taxable threshold can also withdraw their registration for VAT.
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VAT Deregistration Criterion for the tax group
The tax group is referred to as the taxable entity where two or more people registered collectively under one person taxable individual. For example, the business is a taxable group that does not fulfill the VAT registration requirements. It can be under the category of VAT exemption or zero VAT. Additionally, an individual who is no longer associated with the taxable group can also deregister for the VAT to exclude from the group. Further, the Federal Tax Authority can also revoke tax group VAT registration.
Phase 2: Select Deregistration method
Essentially, the method for deregistration should be considered a must to make the process smooth. The possible ways can be as given:
Mandatory cancellation of VAT
This method is used by the federal tax authority to deregister the individuals or tax groups. As they don’t meet the set criterion for VAT. For example, if the authorities find that the individual is not associated with a profit generation agency or not intended to make a profit, they can use the method of deregistration for such entities.
Voluntary cancellation of VAT
It is a method used by the individuals for VAT deregistration. The tax groups or individuals can self-impose the option of cancellation if they are not meeting the requirements of VAT. However, there should be valid reason with all supporting evidence to apply for deregistration.
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Phase 3: Process the Application
- Last but not least, the individuals intended to cancel their VAT registration should precede the application wisely to avoid strict penalties. Here are given the steps for doing this:
- Application for deregistration should be submitted only in a case if the individual or the tax group fulfills the criterion for cancellation.
- The individual or tax group should submit all essential documents and evidence supporting the claim for VAT cancellation.
- It is imperative to settle for all dues and payments of VAT before applying for cancellation.
- The individual or tax group should wait for the federal tax authorities to get VAT deregistration.
Need assistance for VAT deregistration?
Hopefully, the guide helped you to understand the process of VAT cancellation. You may proceed with the process individually, but it is suggested to get some professional assistance to avoid complications. So, if you are worried about how to do it, it is better to acquire the best VAT consultancy in Dubai. And entrust the responsibility of foolproof Deregistration for both the individuals and the companies from VAT.
Don’t forget to make an evaluation of the criterion first to get everything done successfully!