Introduction

VAT deregistration in the UAE is not just an optional process — it is a mandatory legal requirement when a business no longer meets the VAT registration criteria set by the Federal Tax Authority (FTA).

Many UAE businesses mistakenly ignore VAT deregistration, assuming inactivity or low turnover automatically removes VAT obligations. In reality, failure to deregister on time can lead to penalties, audits, and compliance issues.

At MHK Accounting & Taxation Services LLC, we help businesses across Mainland and Free Zones manage VAT deregistration correctly, smoothly, and penalty-free.

This guide explains when VAT deregistration is required, why it matters, and how to apply step by step.

1. What Is VAT Deregistration in UAE?

VAT deregistration is the official process of removing a business from the FTA VAT register when it no longer qualifies or is required to remain VAT-registered.

Once approved:

• VAT filing obligations stop
• TRN becomes inactive
• Business must still retain records for audit purposes

📌 Note: The FTA can still audit past VAT periods even after deregistration.

2. When Is VAT Deregistration Required?

A business must apply for VAT deregistration if:

2.1 Mandatory Deregistration

You must deregister if:

• Taxable turnover falls below AED 187,500
• Business activity stops permanently
• Trade license is cancelled
• Company is liquidated or closed

2.2 Voluntary Deregistration

You may apply voluntarily if:

• Taxable turnover falls below AED 375,000
• Business restructures or downsizes
• VAT registration no longer provides commercial benefit

📌 Deregistration must be applied within 20 business days of eligibility.

3. Why VAT Deregistration Is Important

Ignoring VAT deregistration can cause serious issues:

❌ Administrative penalties
❌ FTA account blockage
❌ Audit risk
❌ Trade license renewal delays
❌ Compliance notices from FTA

Many of these issues are highlighted in our article on
👉 Accounting Mistakes That Cause FTA Penalties
https://mhktaxuae.com/accounting-mistakes-that-cause-fta-penalties-uae/

4. Step-by-Step VAT Deregistration Process in UAE (2026)

Step 1: Confirm Eligibility

Ensure turnover is below threshold or business activity has ceased.

Step 2: Submit Final VAT Return

All pending VAT returns must be filed before deregistration.

Step 3: Clear VAT Payables

Any outstanding VAT liability must be paid.

Step 4: Apply via FTA Portal

Apply through the official FTA e-Services portal:
https://eservices.tax.gov.ae/#/Logon

Step 5: Maintain Records

VAT records must be retained for 5 years after deregistration.

5. Common Mistakes During VAT Deregistration

Businesses often make these errors:

• Applying without filing final VAT return
• Ignoring pending penalties
• Incorrect turnover calculation
• Late deregistration submission
• Poor documentation

These mistakes are also covered in detail here:
👉 https://mhktaxuae.com/uae-company-registration-mistakes/

6. How MHK Helps with VAT Deregistration

At MHK Accounting & Taxation UAE, we provide end-to-end VAT deregistration support, including:

• Eligibility assessment
• Final VAT return filing
• VAT reconciliation
• FTA application handling
• Audit-ready documentation

Explore our VAT Services here:
https://mhktaxuae.com/service/vat-services/

Related compliance services:

• Accounting & Bookkeeping: https://mhktaxuae.com/service/accounting-bookkeeping/
• Corporate Tax Advisory: https://mhktaxuae.com/service/corporate-tax/
• Payroll Compliance: https://mhktaxuae.com/service/payroll-compliance/

7. VAT Deregistration & Future Compliance

Even after VAT deregistration:

• FTA audits may occur
• Records must be preserved
• Incorrect past filings can still attract penalties

Read more on FTA audits here:
👉 https://mhktaxuae.com/fta-tax-audit-uae-2026/
👉 https://mhktaxuae.com/fta-audit-preparation-uae-2026/

Conclusion

VAT deregistration in UAE is a legal obligation, not a formality. Delays or mistakes can result in penalties and long-term compliance issues.

The safest approach is professional handling, ensuring accuracy, timelines, and FTA compliance.

With expert guidance, VAT deregistration becomes simple, secure, and risk-free.

References (External Links)

• Federal Tax Authority (FTA): https://eservices.tax.gov.ae/#/Logon
• UAE Ministry of Finance: https://mof.gov.ae/en/about-ministry/the-minister/

Internal Links (Related Reading)

• VAT & Corporate Tax Compliance: https://mhktaxuae.com/corporate-tax-vat-compliance/
• FTA Penalties Explained: https://mhktaxuae.com/fta-penalties-uae/
• Business Setup Tax Impact Guide: https://mhktaxuae.com/uae-business-setup-mainland-freezone-offshore-tax-guide-2026/
• AI in Accounting UAE: https://mhktaxuae.com/ai-in-accounting-uae-2026-smart-finance/
• Financial Forecast UAE 2026: https://mhktaxuae.com/financial-forecast-uae-2026/

Call-to-Action

🚀 Need help with VAT deregistration in UAE?
Avoid penalties and FTA issues with expert support.

Contact MHK Accounting & Taxation UAE
https://mhktaxuae.com/contact/