VAT deregistration is often overlooked during a business closure, restructuring, or slowdown — but the FTA treats it as seriously as registration itself, with a strict deadline and an escalating penalty for missing it.

When deregistration becomes mandatory

You're required to apply for VAT deregistration within 20 business days of any of the following:

  • Your business has stopped making taxable supplies entirely (for example, on winding up or liquidation).
  • Your taxable supplies over the past 12 months have fallen below the voluntary registration threshold of AED 187,500, with no expectation of exceeding it in the next 30 days.

Voluntary deregistration

If your business is still trading but your taxable supplies have dropped below the AED 375,000 mandatory threshold (while remaining above AED 187,500), you may apply to deregister voluntarily — though you're not obliged to.

The penalty for missing the deadline

Failing to submit your deregistration application within the 20-business-day window triggers a penalty starting at AED 1,000, increasing by a further AED 1,000 for each additional month of delay, up to a maximum of AED 10,000.

What you need before you apply

  • All outstanding VAT returns filed and liabilities settled — the FTA will not process a deregistration application while there are open filings or unpaid amounts.
  • Supporting documents such as a copy of the revoked trade licence, liquidation letter, or board resolution (where the business is closing), and recent financial statements.
  • A final VAT return, filed after deregistration is approved, covering the final tax period.

Common reasons applications get rejected or delayed

  • Applying before all previous VAT returns and payments are settled.
  • Miscalculating the taxable supplies threshold — for example, incorrectly including exempt supplies or excluding zero-rated ones.
  • Incomplete supporting documentation, which triggers an FTA request for more information and resets the clock on processing.

What happens after approval

Once deregistration is approved, your Tax Registration Number is cancelled and you're no longer required to charge VAT, file returns, or meet ongoing VAT compliance obligations — but you must still retain all VAT-related records (invoices, contracts, ledgers) for the standard statutory retention period, in case of a future FTA review.