How Tax Groups Can Conduct VAT Deregistration in UAE

Two or more related taxable persons conducting businesses are allowed to form a tax group and perform Vat registration in the UAE. Two or more related parties register for VAT as a tax group as the supplies between the members of a VAT Group are considered as out of the scope of VAT. However, there are situations where a tax group is required to conduct VAT deregistration in the UAE.

For instance, if the tax group no longer qualifies for the requirements for VAT registration, they should deregister. Tax groups registered with the Federal Tax Authority (FTA) can consult with accredited tax agents in Dubai to perform VAT deregistration. In this article, we enlist the process and various reasons for VAT deregistration that tax groups should be aware of.

Various Scenarios for Deregistering a Tax Group in the UAE?

The primary reasons for deregistering a tax group and individual VAT deregistration are the same. A tax group can be deregistered if the group companies are no longer making any taxable supplies. Tax groups can deregister if the group companies make taxable supplies but the value in the preceding 12 calendar months is less than the Voluntary Registration Threshold (AED 187,500). Deregistration is also applicable if the group companies make taxable supplies, but the value in the previous 12 months was less than the Mandatory Registration Threshold (AED 375,000).

Apart from the common reasons, the following are the various scenarios in which the tax groups become eligible for deregistration.

1. The entity registered as tax groups no longer meet the requirements to be considered as a tax group

A tax group is eligible for VAT registration if each member entity has a place of establishment in the UAE; the relevant members of the group are related parties, and one or more persons conducting the business should control the other members. If the tax group no longer meets these requirements, then it should mandatorily apply for VAT deregistration in the UAE.

2. The registered entity no longer has any association with the group

In a tax group, the persons should be related parties where one of them can control others either by Law or through the acquisition of shares or voting rights. If the tax group entities no longer have any such association through economic, financial or regulatory practices, the tax group should be deregistered.

3. FTA Initiates a tax group deregistration on its own capacity

FTA can deregister a tax group if the authority has reason enough to believe that the tax group is involved in tax evasion, fraud or any non-compliance that would impact the integrity of UAE’s tax system.

The Process of Deregistering a Tax Group

The process of deregistration of a tax group must be initiated through FTA’s portal in which the VAT registration was made previously. The option for deregistration appears on the dashboard against the Tax Group registration space. The reason for deregistering the tax group and the date from which deregistration is required must be specified.

Along with the application for tax group deregistration, all the relevant documents and information must be submitted. The applicants then need to wait for FTA’s approval for the deregistration application. The FTA will send the result of the application after the authority completes the review. Accredited tax agents in Dubai will perform the entire process of deregistration on behalf of the member entities.

Penalty for Failing to Apply for VAT Deregistration

A tax group should submit the application for VAT deregistration within 20 days of becoming eligible for deregistration. The failure of the VAT registrant to submit a deregistration application would attract an administrative penalty of AED 10,000. Hire the best tax agents in Dubai to avoid such hefty penalties.

How can VAT Consultants in Dubai Help Businesses?

The UAE allows two or more related taxable entities to form a tax group and register for VAT as a single group. There are circumstances where the entities of a tax group will be required to deregister. An entity that fails to deregister within 20 days of becoming eligible for deregistration is liable to pay penalties to the FTA. Tax group entities can avoid such penalties by hiring the best VAT consultants in Dubai, UAE.

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