VAT deregistration in the UAE is compulsory in two situations: your business stops making taxable supplies, or its taxable supplies over 12 consecutive months fall below the AED 187,500 voluntary registration threshold and you do not expect taxable expenses above that figure in the next 30 days. In either case you must apply to the Federal Tax Authority (FTA) within 20 business days of the trigger. If your taxable supplies sit between AED 187,500 and AED 375,000, deregistration is your choice, not an obligation.
This article is for businesses that are still trading. If you are closing the company, see our guide on how to close a UAE free zone company instead.
Key takeaways
- Article 21 of the VAT Decree-Law makes deregistration mandatory when taxable supplies stop, or when 12 months of taxable supplies fall below AED 187,500 and the 30-day expense test is not met.
- Article 22 lets you apply, without being forced to, when the last 12 months of taxable supplies were below the AED 375,000 mandatory threshold.
- A business that registered voluntarily cannot apply to deregister within 12 months of its registration date, under Article 23.
- The application window is 20 business days from the trigger, and missing it costs AED 1,000, then AED 1,000 again on the same date each month, up to AED 10,000.
- Stock and assets on which you recovered input tax are treated as sold immediately before deregistration, so VAT on them goes into your final return.
- Since 1 January 2026, an unclaimed VAT credit lapses after five years, so a deregistering business should decide what to do with any refund balance before it leaves.
The two cases where you must deregister
The rules sit in Federal Decree-Law No. 8 of 2017 and its amendments, in the consolidated version the FTA published on 28 November 2025, and in the Executive Regulation (Cabinet Decision No. 52 of 2017), consolidated to September 2026. Both are unofficial English translations of the legislation.
You stop making taxable supplies
Article 21(1)(a) is blunt: a registrant “shall apply” for deregistration if it stops making taxable supplies. Taxable supplies include zero-rated sales, because the law defines a taxable supply as any supply for consideration in the course of business that is not an exempt supply. A Dubai events company that suspends operations and does not expect to invoice anyone for the next year falls into this case even though its licence is still valid.
Your turnover falls below AED 187,500
Article 21(1)(b) makes deregistration mandatory when the value of taxable supplies over 12 consecutive months is below the voluntary registration threshold of AED 187,500 (set in Article 8 of the Executive Regulation), unless the business meets the condition in Article 17(2). That condition is an expectation that taxable supplies or taxable expenses will exceed AED 187,500 in the coming 30 days.
A startup in Dubai Internet City with modest sales but a large fit-out or equipment purchase about to land may still qualify to stay registered. A consultancy in JLT whose sales have shrunk and whose costs are small does not.
The FTA expects you to put that forward-looking view in writing. For this case, the FTA’s VAT deregistration service page, last updated 10 September 2026, asks for an official declaration on company letterhead, dated and stamped, confirming the business will not exceed the registration threshold in the next 30 days. Sign that letter only after checking the purchase pipeline, because it is the statement the FTA will hold you to.
When deregistration is a choice
Article 22 allows a registrant to apply if its taxable supplies over the past 12 months were below the AED 375,000 mandatory registration threshold (Article 7 of the Executive Regulation). In practice this covers the band from AED 187,500 to AED 375,000, since anything lower is already mandatory.
Under Article 14(5) of the Executive Regulation, the FTA then deregisters you from the date you request, or from the application date if you leave it blank, or from a date it sets. The catch is Article 23: a voluntary registrant cannot apply within 12 months of its registration date, so a founder who registered early to look established cannot back out after one slow quarter.
| Taxable supplies, last 12 months | Position under the law | What to do |
|---|---|---|
| Zero, and none expected for 12 months | Mandatory, Article 21(1)(a) | Apply within 20 business days of stopping |
| Below AED 187,500, no taxable expenses above AED 187,500 expected in 30 days | Mandatory, Article 21(1)(b) | Apply within 20 business days of the 12-month test failing |
| Below AED 187,500, but supplies or expenses above AED 187,500 expected in 30 days | May stay registered, Article 17(2) condition met | Document the expected expense and keep checking monthly |
| AED 187,500 to AED 375,000 | Optional, Article 22 | Decide on commercial grounds; voluntary registrants wait 12 months from registration |
| Above AED 375,000 | Must stay registered | No deregistration on turnover grounds |
Supplies of capital assets are left out of this calculation under Article 20. Selling your delivery van or office furniture for AED 90,000 does not lift a small trading company back over the line.
How the 20-business-day window runs
Article 14(1) of the Executive Regulation, as amended by Cabinet Decision No. 100 of 2024, requires the application within 20 business days of the event occurring. On a Monday to Friday week that is roughly four calendar weeks, less if a public holiday falls inside it.
The clock starts on the date of the event, not the date someone in the finance team notices it. For the turnover test, that means the 12-month figure is a rolling one. A Business Bay design studio that checks its VAT position only when it files quarterly returns can discover in July that its rolling total dropped below AED 187,500 at the end of April, by which time the window has already closed. One issue we often see: the numbers were in the accounting system, but nobody ran the rolling figure monthly.
The penalty is set in the table annexed to Cabinet Decision No. 40 of 2017, as amended by Cabinet Decision No. 129 of 2025 (in force from 14 April 2026). Failure to submit a deregistration application on time carries AED 1,000, then AED 1,000 on the same date each month, up to AED 10,000. On that schedule, a business six months late has built up about AED 7,000.
The FTA can also act first. Article 14(4) of the Executive Regulation lets it deregister a registrant that meets the conditions but has not applied, or left an application unfinished. That does not help you, because the late-application penalty is tied to your own 20-day obligation.
What the FTA needs before it approves
The application is filed on EmaraTax, and the FTA service page lists it as free, with an estimated 45 minutes to complete. The FTA aims to process a complete application within 20 business days of receiving it. The documents depend on the reason you select. For a business that is still trading, the page asks for:
- A financial turnover template showing taxable income and expenses from the date of actual registration, not only the last 12 months, in every turnover-based case.
- The latest financial statements (trial balance, profit and loss or balance sheet, audited or unaudited) where supplies fell below AED 187,500.
- A dated, stamped letter confirming the business will not exceed the threshold within the next 30 days, in both the below-AED 187,500 case and the AED 187,500 to AED 375,000 case.
- For a company whose supplies are outside the scope of VAT or exempt, a chart of the business model, suppliers and importers with the countries involved, plus sample invoices.
Files can be PDF, Excel, Word, JPG or PNG, up to 5 MB each. The attachments are where applications stall. Because the turnover template runs from the registration date, any gap between it and the VAT returns already filed is visible at once, and a query from the FTA adds time before a decision.
Approval also depends on a clean account. Article 14(7) of the Executive Regulation requires the registrant to pay all tax and administrative penalties due and file the final tax return. The FTA page says the final return must be filed, and the tax paid, no later than 28 days from the effective date of deregistration, which it describes as the end of the final tax period, and a deregistration certificate can be downloaded once approved.
The VAT charge on assets you still hold
This is the part of deregistration that surprises owners. Article 11(4) of the Decree-Law treats goods and services a taxable person owns at the date of deregistration as a deemed supply, and Article 14(8) of the Executive Regulation says they are deemed supplied immediately before deregistration, with the tax included in the final return.
The charge only bites where input tax was recovered. Article 12 excludes goods and services on which no input tax was recovered, exempt supplies, and assets already adjusted under the Capital Assets Scheme. Article 5(2)(a) of the Executive Regulation sets an AED 2,000 limit per supplier over 12 months for deemed-supply output tax, with any amount above that treated as payable tax.
Take a hypothetical Deira electronics trader that recovered input tax on stock still worth AED 60,000 at cost when it deregisters. VAT at 5% on that value would be AED 3,000, payable in the final return. Article 37 ties the value of a deemed supply to the cost incurred, and FTA Directive on Tax Transactions No. 5 of 2026 sets out a cost-based method for valuing deemed supplies of services. Have mixed-asset valuations reviewed rather than guessed.
The practical move is to plan the date. Selling surplus stock with VAT charged before the deregistration date, or using it up in taxable sales, is often cleaner than paying tax on it as a deemed supply at the end.
Refund balances and the five-year limit
Many small businesses that deregister are sitting on a VAT credit, typically from a year of set-up costs with little revenue. Article 74(3) of the Decree-Law, amended by Federal Decree-Law No. 16 of 2025 with effect from 1 January 2026, now says an excess of recoverable tax that is not claimed or used within five years from the end of the tax period in which it arose lapses. The Ministry of Finance announced the change on 3 December 2025.
The slate is not wiped in the other direction either. Article 21(3) keeps the FTA’s right to claim tax or penalties due, so an error in a 2024 return can still be assessed later. Reconcile, correct errors and claim the credit while the account is open.
When staying registered makes more sense
Being allowed to deregister is not a reason to do it. For a business in the optional band, three factors usually settle it.
The first is input tax. An exporter whose sales are zero-rated, or a company with heavy UAE costs and small local revenue, can lose real money by deregistering because it stops recovering VAT on rent, software and equipment. The second is the client base. A B2B consultancy invoicing VAT-registered companies that recover their input tax adds no net cost to them by charging 5%, while a salon or a tutor selling to individuals is effectively 5% more expensive while registered. The third is how stable revenue is. If the business is likely to cross AED 375,000 again soon, Article 7(2) of the Executive Regulation gives it 30 days to apply once registration becomes mandatory, and Article 14(9) confirms deregistration does not remove that duty.
For a small business we would usually recommend staying registered where turnover dipped for a known, temporary reason, such as a summer slowdown or a single lost contract. Leaving and rejoining means extra filings and extra deadlines to miss.
VAT and Corporate Tax are separate registrations. Leaving VAT does not deregister you for Corporate Tax, whose registration rules do not depend on the VAT thresholds; our note on Corporate Tax registration for free zone companies explains that side.
A checklist before you submit
- Run the rolling 12-month taxable supplies figure for each of the last six month-ends, excluding capital asset sales, and note the first month it fell below the relevant threshold.
- Check the registration date if you registered voluntarily, and confirm 12 months have passed.
- Test the Article 17(2) condition by listing any taxable supplies or expenses expected in the next 30 days, with evidence.
- List stock and assets on which input tax was recovered, and estimate the deemed supply VAT.
- Reconcile the turnover template to the VAT returns already filed, and correct any errors first.
- Decide what happens to any VAT credit balance before the account closes.
- Choose the deregistration date you will request, and diary the final return for 28 days after the effective date.
