If your business has stopped trading or your sales have dropped, you may have to cancel your VAT registration, and the deadline is short. You have 20 business days, roughly four weeks, from the day you become eligible. Missing it costs AED 1,000 a month. Your VAT returns also stay due until the FTA approves the cancellation.
This guide covers when deregistration is compulsory and when it’s your choice, what it costs to be late, what goes in your final return, and the new 2026 rule that can wipe out a VAT refund if you deregister without claiming it.
The short answer
You must apply to deregister within 20 business days if you stop making taxable supplies, or if your taxable supplies over the last 12 months fall below AED 187,500 and aren’t expected to go above it in the next 30 days. If they’re between AED 187,500 and AED 375,000, deregistering is optional. Applying late costs AED 1,000, plus AED 1,000 a month, up to AED 10,000.
When you must deregister
| Situation | Must you deregister? |
|---|---|
| You’ve stopped making taxable supplies altogether (closure, liquidation, sale of the business) | Yes, within 20 business days |
| Taxable supplies over the last 12 months are below AED 187,500, and won’t go above it in the next 30 days | Yes, within 20 business days |
| Taxable supplies over the last 12 months are between AED 187,500 and AED 375,000 | No, but you can apply if you want to |
| You registered voluntarily less than 12 months ago | No. You generally can’t deregister in your first 12 months |
| You now make only exempt supplies | Yes, because exempt supplies aren’t taxable supplies |
The most common mistake is testing against the wrong number. Compulsory deregistration is tested against the AED 187,500 voluntary threshold, not the AED 375,000 mandatory one. A business turning over AED 250,000 a year is not obliged to deregister. It is allowed to.
How the 12 months are counted
As with registration, the test uses a rolling 12 months, checked at the end of each month. It is not your financial year. Count your standard-rated and zero-rated sales and any imports you account for under the reverse charge. Exempt and out-of-scope income don’t count. Our guide to VAT registration in the UAE explains what counts in more detail.
When the 20 business days start
The clock starts on the day you become eligible: the day you stop making taxable supplies, or the month-end at which your rolling 12-month total drops below AED 187,500. It does not start when you notice, or when your licence is cancelled.
A company that stops trading on 1 March 2026 must apply by around 27 March 2026. That is 20 business days, excluding weekends and public holidays.
Penalties for late deregistration
Cabinet Decision No. 129 of 2025 kept the penalty for applying late at the same level:
| How late | Penalty |
|---|---|
| Deadline missed | AED 1,000 |
| Each further month, or part of a month | Another AED 1,000 |
| Maximum | AED 10,000 |
The late-deregistration fine is usually the smaller cost. Your VAT returns stay due until the FTA approves your application. A missed return costs AED 1,000, or AED 2,000 if it happens again within 24 months, even when nothing is owed. Any VAT paid late is charged 14% a year, calculated monthly, under the rules in force since 14 April 2026. On a company nobody is looking after, all three run at the same time.
The FTA can also cancel a registration itself if it finds you meet the conditions, and the late penalty can still apply when it does.
Your final VAT return
The FTA sets an effective date for your deregistration. Your final return covers the period from your last return up to that date. Two items catch businesses out:
1. VAT on stock and assets you still hold
If you still hold goods or business assets on which you recovered VAT, deregistering counts as a supply of them to yourself (a deemed supply). You must pay output VAT on their market value in your final return. For a business winding down with stock, vehicles or equipment, this can be a significant amount.
2. Any VAT the FTA owes you
New since 1 January 2026: Federal Decree-Law No. 16 of 2025 limits how long you can claim back excess VAT. A refund or credit must be claimed, or used, within five years from the end of the tax period it arose in. After that, the right to it is lost. There is a transitional deadline of 31 December 2026 for older credits, mainly from 2018 to 2020. If you’re deregistering with a credit on your account, claim the refund before you close. Once the business is gone, it’s easy to lose track of it.
Before you apply: what must be cleared
- Every past VAT return filed
- All VAT and penalties paid
- Your EmaraTax details up to date, including the authorised signatory
- Your trading figures for the last 12 months prepared
- A list of the stock and assets you still hold, with their market values
If your books are behind, sort them out first. Our backlog accounting service brings them up to date.
Documents the FTA usually asks for
- The taxable supplies and expenses templates from the EmaraTax application, showing your last 12 months
- A signed declaration on company letterhead confirming your supplies won’t exceed the relevant threshold in the next 30 days (if you’re applying on turnover grounds)
- Your latest financial statements
- If the business is closing: the liquidation or dissolution documents, or the licence cancellation certificate if it’s been issued
- Passport and Emirates ID of the authorised signatory
All your documents must show the same date your taxable supplies stopped or fell below the threshold. Different dates on different documents are the most common reason the FTA comes back with questions.
How to deregister for VAT on EmaraTax
- Log in to EmaraTax and open your Taxable Person profile.
- Check your VAT account. All returns filed, nothing owing.
- Choose VAT deregistration and select the reason.
- Enter the date you became eligible.
- Complete the supplies and expenses templates and upload your documents.
- Submit, and reply quickly if the FTA asks for more information.
- Keep filing returns until you’re approved.
- File your final return once the FTA confirms the effective date.
There is no FTA fee. The FTA aims to process a complete application within about 20 business days, and then notifies you of the effective date. It takes longer if the FTA has questions.
Closing a company: VAT and Corporate Tax are separate
- Stop charging VAT from the effective date, and remove your TRN from invoices.
- Keep your records for at least five years after the end of the relevant tax period, or longer for real estate. The FTA can still review past returns after you’ve deregistered.
- Keep an eye on your sales. If they go above AED 375,000 again, you must register again within the normal deadline.
After deregistration
If you’re closing a company, VAT deregistration is only one of two tax applications. Corporate Tax deregistration has its own deadline of three months after the business ceases. VAT’s 20 business days run out first, so it’s usually the first deadline missed. Our guide to Corporate Tax deregistration covers the other side, including how both fit into a liquidation.
Common mistakes
1. Using the AED 375,000 figure to decide whether you must deregister. The compulsory test is AED 187,500.
2. Waiting until the licence is cancelled. The 20 business days start when you stop trading or drop below the threshold.
3. Stopping returns after applying. They’re due until the FTA approves.
4. Forgetting VAT on stock and assets in the final return.
5. Leaving a VAT credit unclaimed. Since 2026, it can be lost after five years, and older credits must be claimed by 31 December 2026.
6. Deregistering a voluntary registration too early. You generally can’t in the first 12 months.
Frequently asked questions
What is the deadline for VAT deregistration in the UAE?
20 business days from the date you become eligible, for example the day you stop making taxable supplies or the month-end at which your rolling 12-month taxable supplies fall below AED 187,500.
What is the penalty for late VAT deregistration?
AED 1,000 when the deadline is missed, plus AED 1,000 for each further month or part of a month, up to a maximum of AED 10,000. Cabinet Decision No. 129 of 2025 kept this penalty unchanged.
When is VAT deregistration mandatory in the UAE?
When you stop making taxable supplies, or when your taxable supplies over the previous 12 months fall below AED 187,500 and aren’t expected to go above it in the next 30 days.
Can I deregister for VAT if my turnover is below AED 375,000?
Yes, if your taxable supplies over the last 12 months are between AED 187,500 and AED 375,000, you can choose to apply. It isn’t compulsory. If you registered voluntarily, you generally have to wait 12 months from registration.
Do I have to keep filing VAT returns after applying to deregister?
Yes. Returns stay due until the FTA approves your application, and missing one attracts a penalty even if no VAT is owed.
What happens to my VAT refund if I deregister?
You should claim it before you close. Since 1 January 2026, excess VAT must be claimed or used within five years of the end of the tax period it arose in, and older credits must be claimed by 31 December 2026.
How Fintra Global can help
We handle VAT deregistration end to end: testing whether you must or can deregister, preparing the supplies and expenses templates, working out VAT on your remaining stock and assets, filing the final return, and claiming any refund before it lapses. If you’re closing a company, we also handle the Corporate Tax side and the liquidation, so nothing falls between them. For ongoing VAT return filing or a review of a past position, our VAT services team can help.
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