What is De-registration?
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.
What the reasons are for de-registration?
There are 3 major points for de-registration:
-Business no longer making taxable supplies
-Business making taxable supplies but below voluntary threshold
-Business making taxable supplies above voluntary threshold but below Mandatory threshold
What is the process of De-registration?
When a taxable person after logging into the FTA website, there is an option to open ‘De-registration’ form in dashboard. One should fill up the De-registration form and submit the necessary documents before submitting the De-registration form.
When to do De-registration?
A registrant should apply for de-registration within 20 business days of the occurrence of either of dropping below the threshold of AED 375,000 in annual revenue, if it closes down or no longer trades in taxable goods or supplies.
The FTA can cancel a person’s registration if it is found that the registrant satisfies either of the 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.
If taxable supplies are less then AED 187,500/- during last 12 months, but Taxable expenses are more than AED 187,500/- or vice versa then what to do?
It is not mandatory to apply for de-registration.
If taxable supplies and taxable expenses individually are less than AED 187,500 during last 12 months, then what to do?
It is mandatory to apply for de-registration.
If refund is yet not claimed, can we apply for de-registration?
No, first the client has to claim refund then only they can file de-registration. Otherwise taxable person cannot apply for refund.
If fourth return is not filed yet (4th return is due for filing in February 2019 or later), can we apply for de-registration?
For de-registration if taxable person completes 12 months then, one can apply for De-registration subject to compliance of other provisions of the law.
If we don’t do de-register within the due date, then how much is the penalty?
Within how many days we have to do de-registration?
Within 20 business days from the date when taxable person meets with one of the two conditions mentioned above.
In case of Tax group, how to consider? (Each company T/O or all company together).
Awaiting clarification from FTA.
In case of Tax group, if a Member company or Representative company closes, can we do de-register?
That particular company shall apply for de-registration.
What are the documents that are required to apply for de-registration?
If it is company closure, then Trade license, cancelation certificate and closure documents.
If sales is less than the voluntary threshold, then one needs to provide income statement on company letterhead.
If VAT payment is pending then can we apply for de-registration?
No, first client has to clear tax liability then only he can apply for de-registration.
If sales is more than AED 187,500/- but not more than AED 375,000/- can we do de-registration?
Yes, if the taxable person wants to de-register then they can but final approval will be given by FTA.
In 12 months if the sales is AED 180,000/- and in next month, the expected sales is AED 20,000/-, then what is the de-registration call?
No, it’s not mandatory to de-register in the above case as taxable sales for last 12 months along with expected sales for next 30 days here is more than AED 187,500.
If in last 12 months, sales is AED 150,000/- and we de-register but next year if the sales are AED 400,000/- then what to do?
In this scenario, if the sales reaches AED 375,000 then the applicant should get TRN by registering.