What is the penalty for not applying for VAT deregistration on time?

Table No. 1 On Violations and Administrative Penalties related to the Implementation of Federal Law No. 7 of 2017 on Tax Procedures No. Description of Violation Administrative Penalty in AED 1 The failure of the Person conducting 10,000 for the first time. Business to keep the required 20,000 in case of repetition. records and other information specified in the Tax Procedures Law and the Tax Law. 2 The failure of the Person conducting 20,000 Business to submit the data, records, and documents related to Tax in Arabic to the Authority when requested. 3 The failure of the Taxable Person to 10,000 submit a registration application within the timeframe specified in the Tax Law. 4 The failure of the Registrant to 1,000 in case of delay, and on the same submit a deregistration application date monthly thereafter, up to a maximum within the timeframe specified in of 10,000. the Tax Law. 5 The failure of the Registrant to 5,000 for the first time. inform the Authority of any 10,000 in case of repetition. circumstance that requires the amendment of the information pertaining to its Tax record kept by Authority. 6 The failure of the Legal 10,000 Representative of the Taxable Person to inform the Authority of its appointment as Legal Representative within the specified timeframe, in which case the Penalties will be due from the Legal Representative’s own funds. Cabinet Decision No. 49 of 2021 - Issue Date: 28 April 2021 - Unofficial Translation 2

Article 14 – Tax Deregistration 9 1. The Registrant must apply to the Authority for Tax deregistration in the cases mentioned in the Decree-Law, within 20 (twenty) Business Days of the occurrence of any of them. 2. The Authority shall accept the Registrant’s application for Tax deregistration where the following two conditions are met: a. The Registrant stops making supplies referred to in Article 19 of the Decree-Law and does not expect to make any such supplies over the next 12-month period; b. The value of supplies referred to in Article 19 of the Decree-Law made, or Taxable Expenses incurred, by the Registrant over the previous 12 (twelve) months is less than the Voluntary Registration Threshold, and the Authority is satisfied that his supplies, according to the provisions of the Decree-Law, or Taxable Expenses, expected over the next 30 (thirty) days, are not expected to exceed the Voluntary Registration Threshold. 3. If the Tax deregistration application is approved, the Authority shall deregister the Registrant with effect from the last day of the Tax Period during which the Registrant has met the conditions for deregistration or from such other date as may be determined by the Authority. 4. Where the Authority is satisfied that the conditions in Clause 2 of this Article are met, and the Registrant has not applied for Tax deregistration or has submitted a request but has not completed its procedures, the Authority shall deregister the Registrant with effect from the date on which the Authority became satisfied that the conditions have been met or from any other date determined by the Authority. 5. Where a Registrant applies for Tax deregistration due his Taxable Supplies falling below the Mandatory Registration Threshold, the Authority shall, after approving the application, deregister him with effect from: a. the date requested by the Registrant in the application, b. the date on which the application is submitted if the Registrant did not indicate the preferred Tax deregistration date, or c. any other date specified by the Authority. 6. Where the Authority has deregistered a Registrant for Tax, it shall notify him, within 10 (ten) Business Days of the decision to deregister, of the effective date of the deregistration. 9 Article amended as per Cabinet Decision No. 100 of 2024. Cabinet Decision No. 52 of 2017 and its amendments – Unofficial translation 12 7. Where a Registrant applies for Tax deregistration, he shall pay all Tax and Administrative Penalties due and file the final Tax Return as due under the DecreeLaw and the Tax Procedures Law. 8. Any Goods and Services forming part of the assets of Business carried on by a Registrant shall be deemed to be supplied by him at a time immediately before his Tax deregistration, and any Tax due thereon shall be included in the final tax return, unless the Business is carried on by the Legal Representative pursuant to the provisions of the Tax Procedures Law. 9. The Tax deregistration shall not absolve a Person from having to comply with the provisions of the Decree-Law and this Decision, including filing another Tax Registration application when the Tax Registration requirements are met. Article 14 (bis) - Tax Deregistration to Protect the Integrity of the Tax System 10 1. The Authority may issue a decision to deregister a Person for Tax if the Authority determines that maintaining such Tax Registration may prejudice the integrity of the Tax system, provided that any of the following conditions is met: a. the Registrant no longer meets the Tax Registration requirements according to the provisions of the Decree-Law, b. the Registrant has not submitted an application for Tax deregistration to the Authority as specified under Clause 1 of Article 21 of the Decree-Law, or the Registrant has initiated a Tax deregistration application with the Authority but has not completed such application, c. any other conditions specified by the Authority. 2. The Authority shall verify that the Person is not eligible for Tax Registration before deregistering him. 3. Tax deregistration initiated by the Authority shall not absolve a Person from having to comply with the provisions of the Decree-Law and this Decision, including filing another Tax Registration application when the Tax Registration requirements are met. 10 Article added as per Cabinet Decision No. 100 of 2024. Cabinet Decision No. 52 of 2017 and its amendments – Unofficial translation 13

Article 21 - Tax Deregistration Cases12 1. A Registrant shall apply to the Authority for Tax deregistration in any of the following cases: a. If he stops making Taxable Supplies. 12 Article amended as per Federal Decree-Law No. 18 of 2022. Federal Decree-Law No. 8 of 2017 and its amendments – As published by the Ministry of Finance 13 b. If the value of the Taxable Supplies made over a period of 12 consecutive months is less than the Voluntary Registration Threshold and the Registrant does not meet the condition stipulated in Clause 2 of Article 17 of this DecreeLaw. 2. The Authority may, in accordance with the controls and conditions specified in the Executive Regulation of this Decree-Law, issue a Tax deregistration decision, if the Authority finds that continuity of such Tax Registration may prejudice the integrity of the Tax system. 3. Tax deregistration shall not result in the relinquishment of the Authority’s right to claim any Due Tax or Administrative Penalties.