In the United Arab Emirates (UAE), businesses are required to stay compliant with the Federal Tax Authority (FTA) regulations under the Value Added Tax (VAT) framework. While VAT registration marks the beginning of your tax obligations, VAT deregistration is an equally important step when your business undergoes structural changes, reduces taxable activities, or ceases operations altogether.
Understanding when and how to apply for VAT deregistration can help avoid costly penalties, administrative delays, and compliance risks. In this guide, The Capital Zone explains everything you need to know about mandatory and voluntary VAT deregistration in the UAE, including eligibility, deadlines, penalties, and the official FTA process through the EmaraTax platform.
What Is VAT Deregistration in the UAE?
VAT deregistration is the formal process through which a business cancels its VAT registration with the Federal Tax Authority (FTA). Once deregistered, the company is no longer required to charge VAT on goods or services, file VAT returns, or maintain tax payments for taxable supplies.
However, VAT deregistration is not automatic; it requires a formal application via the FTA’s EmaraTax system and must meet specific conditions set under UAE Federal Decree-Law No. 8 of 2017 on VAT and its subsequent regulations.
Businesses that fail to deregister when required may face significant penalties and additional administrative obligations.
Why VAT Deregistration Matters
VAT deregistration ensures that your business:
- Remains compliant with FTA regulations
- Avoids unnecessary penalties or fines for non-compliance
- Prevents ongoing VAT obligations when your business no longer qualifies
- Keeps financial and accounting records accurate and clean
For businesses undergoing restructuring, mergers, acquisitions, or ceasing operations, deregistration also simplifies future financial reporting and tax audits.
Mandatory VAT Deregistration
VAT deregistration in the UAE becomes mandatory under specific conditions. According to the FTA:
You must deregister for VAT if:
- Your business stops making taxable supplies, either permanently or temporarily.
- The value of your taxable supplies over the past 12 months has fallen below the voluntary registration threshold of AED 187,500, and you do not expect to exceed it in the next 30 days.
FTA Deadline
Once these conditions are met, the business must submit a VAT deregistration application within 20 business days.
Failing to meet this deadline triggers an automatic penalty.
FTA Penalty for Late Deregistration
Under Cabinet Decision No. 75 of 2023, a fixed penalty of AED 10,000 applies for late submission of a mandatory VAT deregistration request.
The penalty is issued directly by the FTA and cannot be waived unless the business provides clear justification supported by evidence of exceptional circumstances.
Voluntary VAT Deregistration
VAT deregistration can also be voluntary, depending on your business activity and turnover.
You may apply voluntarily for VAT deregistration if:
- You are still making taxable supplies, but their value over the previous 12 months is below AED 375,000 (the mandatory registration threshold).
- You were voluntarily registered for VAT and 12 months have passed since the registration date.
- You have fulfilled all VAT obligations, including filing returns and settling all dues.
The FTA will only approve voluntary deregistration if your business has no outstanding tax liabilities or penalties and has submitted all due VAT returns.
Understanding the VAT Deregistration Process via EmaraTax
The FTA has streamlined the VAT deregistration process through its digital portal, EmaraTax. This platform simplifies filing, documentation, and monitoring the status of deregistration applications.
Below is a simplified version of the official process (as described in the FTA’s VAT Deregistration User Manual).
Step-by-Step Process
Step 1: Log into EmaraTax
Visit the FTA portal and log into your EmaraTax account using your registered email and password. Navigate to your Taxable Person Dashboard.
Step 2: Access VAT Tile
From the dashboard, click on the VAT tile and select the De-registration option under “VAT Registration.”
Step 3: Select the VAT Account to Deregister
Choose the relevant VAT account you wish to deregister and click ‘Deregister’.
Step 4: Fill in Deregistration Details
You will need to provide:
- The reason for deregistration (e.g., business closure, turnover drop, restructuring)
- The effective date when your taxable supplies ceased or fell below the threshold
- Supporting documentation to validate the reason
Step 5: Upload Supporting Documents
Upload any required files, such as:
- Trade license copy
- VAT certificate
- Last VAT return
- Bank statements
- Proof of business closure or restructuring
Step 6: Declaration & Submission
Confirm the accuracy of the data, agree to the terms, and click Submit.
Step 7: FTA Review
The FTA reviews the application and may request additional documents or clarification. Once approved, you will receive confirmation via email and the EmaraTax dashboard.
Step 8: Final Return Submission
Before approval, the FTA will require submission of the final VAT return and payment of any outstanding dues.
After the FTA approves the application, you’ll receive a Deregistration Certificate, and all VAT obligations cease as of the effective date.
Documents Required for VAT Deregistration
Different businesses may require different supporting documents based on their type and activity.
However, the general list of documents required for VAT deregistration in the UAE includes:
- Copy of valid Trade License
- Passport and Emirates ID of the owner/shareholders
- VAT Registration Certificate
- Final VAT return and payment proof
- Bank statements for recent months
- Closure certificate (if business has shut down)
- Proof of turnover (if deregistering voluntarily)
- Deregistration request letter with company letterhead
(Note: The FTA may request additional documents depending on your business type or compliance status.)
Timeline for VAT Deregistration in the UAE
The time required to complete VAT deregistration in the UAE varies depending on the FTA’s review, accuracy of submissions, and settlement of liabilities.
On average:
- FTA acknowledgment: within 3–5 business days after submission
- FTA review and approval: 20–45 business days
- Final confirmation and deregistration certificate: once all dues are cleared
Therefore, the entire VAT deregistration process typically takes 3–6 weeks from application to final confirmation provided all documents are accurate and no pending VAT obligations remain.
Penalties for VAT Deregistration Delays
Businesses that fail to apply for deregistration on time or delay the process may face:
| Violation | Penalty |
| Failure to apply for deregistration within 20 business days (mandatory case) | AED 10,000 fixed penalty |
| Submitting incorrect or incomplete information | Administrative penalty under FTA laws |
| Late submission of final VAT return or unpaid dues | FTA may reject deregistration until full compliance |
The FTA can also suspend your tax account, block future registrations, or impose additional compliance checks.
Post-Deregistration Record-Keeping Requirements
Even after successful deregistration, businesses are required to maintain all VAT-related records for future audits and compliance reviews.
- Standard businesses: Retain records for 5 years
- Real estate companies: Retain records for 15 years
Records include invoices, contracts, ledgers, and correspondence with the FTA. These must be accessible at all times if requested for inspection.
Key Takeaways for Businesses
- Deregister promptly once your business meets the eligibility criteria.
- Submit accurate documentation through EmaraTax to avoid rejection.
- Settle all VAT liabilities and file final returns before applying.
- Maintain post-deregistration records as required by FTA law.
- Consult professionals to avoid administrative errors or late penalties.
How The Capital Zone Can Help
At The Capital Zone, we understand that navigating the UAE’s tax and compliance landscape can be complex especially when dealing with deregistration, restructuring, or business closure.
Our VAT deregistration and tax compliance experts provide:
- Full FTA EmaraTax deregistration assistance
- Review of eligibility and VAT threshold criteria
- Preparation and submission of all required documentation
- Final return filing and liability settlement support
- Liaison with FTA for status tracking and follow-ups
- Advisory on future VAT registration or reactivation if needed
With our expertise, you can ensure your business remains compliant and penalty-free while focusing on your next growth phase.
Download the FTA VAT Deregistration Guide
For detailed FTA instructions, step-by-step screenshots, and official guidelines,
download the official [FTA VAT Deregistration User Manual (PDF)] provided below.
(Attachment: 1761717083738.pdf)
Final Thoughts
VAT deregistration in the UAE is more than just a formality; it’s a critical step in maintaining tax compliance and protecting your business from penalties. Whether your company is downsizing, restructuring, or ceasing operations, taking timely action ensures a smooth transition.
The Capital Zone specializes in guiding businesses through every stage of the VAT lifecycle from registration to deregistration ensuring compliance, efficiency, and peace of mind.
