How and when do I dereg­is­ter from VAT?

Gulf News - - Business -

The re­cently re­leased ex­ec­u­tive reg­u­la­tions on value added tax (VAT) make clear how a busi­ness might dereg­is­ter it­self from pay­ing taxes.

Vol­un­tary rea­sons for dereg­is­tra­tion in­clude drop­ping be­low the thresh­old of Dh375,000 in an­nual rev­enue, if it closes down or no longer trades in tax­able goods or sup­plies.

Manda­tory dereg­is­tra­tion can also oc­cur. If a com­pany doesn’t vol­un­tar­ily dereg­is­ter, the Fed­eral Tax Au­thor­ity (FTA) may can­cel a com­pany’s VAT number be­cause it has stopped mak­ing tax­able sup­plies, with no plans to do so in the fu­ture.

Ac­cord­ing to the ex­ec­u­tive reg­u­la­tions, re­leased last week, the reg­is­trant must ap­ply to the FTA for dereg­is­tra­tion if it meets any of the cases set out in Au­gust’s Fed­eral De­cree-Law, some of which are listed above, within 20 busi­ness days of any of them tak­ing place.

If the dereg­is­tra­tion ap­pli­ca­tion is ap­proved, the FTA will can­cel the tax reg­is­tra­tion of the com­pany with ef­fect from the last day of the tax pe­riod dur­ing which the com­pany met the con­di­tions for dereg­is­tra­tion.

All out­stand­ing taxes, re­turns, and ad­min­is­tra­tive penal­ties must be paid be­fore dereg­is­tra­tion can oc­cur, ac­cord­ing to the ex­ec­u­tive reg­u­la­tions.

Tax groups may also be dereg­is­tered, if they no longer meet the re­quire­ments to be con­sid­ered a group, if the com­pa­nies are no longer as­so­ci­ated on fi­nan­cial terms, or if the FTA be­lieves that con­tin­ued tax group sta­tus would lead to tax eva­sion.

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