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Wondering if de-registration is a taxing job? Well, we are here to help! Let us explain vat we mean. Let's go back to the start!
Value Added Tax (VAT) is an indirect tax imposed on supplies of goods and services. With the standard rate of 5%, businesses in the UAE are responsible for documenting income and cost. A business must register for VAT if they meet the mandatory threshold of AED 375,000, i.e. if the value of taxable supply exceeds this limit. A business can voluntarily choose to register for VAT if it meets the voluntary threshold of AED 187,500, i.e., if the value of taxable supply exceeds this limit.
What is a taxable supply?
A taxable supply is a supply of goods and services on which the tax can be levied. There are benefits to having a TRN. If a business avails the TRN, it becomes a collection agent of the government. This is rewarding as the VAT on business expenses of any kind can be claimed.
Can you de-register?
Definitely! A business can de-register under a few circumstances.
- If a registrant stops making taxable supplies;
- If the business still makes taxable supplies, but its value in the past back-to-back 12 months is less than the voluntary threshold;
- If the business continues to make taxable supplies, but the value in the past continuous 12 months is less than the mandatory threshold, it can voluntarily apply for de-registration.
In the first two cases, the person must apply for de-registration within 20 business days of the situation taking place. Administrative penalties will be imposed in case of failure to apply within the specified date. Businesses face other situations where they consider cancelling their VAT registration. We have listed a few cases where the companies choose to de-register.
- Duplicate TRN This is a situation where one company has different applications submitted and each one has a TRN issued. This requires the cancellation of one TRN.
- Company branch has a TRN In this scenario, a company's branch has a separate TRN issued whereas the branch should have the main company's TRN.
- Meeting voluntary threshold If a business meets the voluntary threshold and not the mandatory threshold, it has a choice not to have TRN.
- Cancelling trade license
A business entity's TRN will be cancelled if its trade license is cancelled.
Wait, before you go...
No person can de-register without having paid all the due taxes and penalties it owed during the period it was registered for VAT. Hence, it is essential that a registrant satisfies the requirements by the Federal Tax Authority for cancelling VAT registration and it is important to be aware of this provision for them to timely utilize it. For any help or inquiry regarding VAT, get in touch with us on +971 56 547 2460 or info@mcledger.co
