Bahrain VAT Tax Groups

Everything to know about Amending a Tax group

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The Value Added Tax was implemented in the Dubai on January 1, 2018, after the realisation hit that the country cannot just depend on the revenue from a single source. This tax promised to bring a boon to the economy of the country and to lessen the burden of the taxation that was imposed earlier wherein a single tax was applicable to various objects. The Value Added Tax not only promised to benefit the businesses and the entrepreneurs but also opened up an avenue for different companies to come together and complete their taxation process in Dubai as a single unit. 

This idea of working as a single unit to do the taxation has brought about a ray of optimism for the business owners and the entrepreneurs to overcome their dreading of the taxation season as this process had made the accounting process and the taxation process in the Dubai a lot simpler. This Value Added Tax has not only proved to be beneficial for the business owners and the entrepreneurs, but it will have a huge impact on making the economy of the Dubai better than ever. The tax groups are the way to boon the businesses and the economy altogether. Before we dig deep into learning about how to amend a tax group, it is necessary to understand what exactly a tax group is. 

What exactly is a Tax Group?

A tax group a collection of more than two businesses wherein they are considered a single entity for the purpose of taxation. Forming a tax group can be beneficial for the company to simplify the tax procedures, but they also need to create a report that would be compliant with the other processes. Although the process of accounting is simplified within a tax group, there could be certain circumstances that will make you to either amend the tax group or de-register it. 

When it comes to amending a tax group, it generally means that certain specifications of the tax group are being changed and these specifications could be the addition of new business to an already existing tax group, the exit of an existing member of the tax group, or the change in the details pertaining the tax group could be introduced. But these amendments can only be made by the representative member of the registered tax group. For making such amendments, an application is sent to the Federal Tax Authority and only after the approval of the Federal Tax Authority could such amendments be made. 

Why amend a tax group?

 When more than two businesses come together, certain circumstances may arise wherein the companies that are a part of the tax group might feel a need to make some amendments in the tax group. The company that suggests any amendment to be made in the tax group has to provide a valid reason and then only after the consensus of the group is achieved could they proceed with their suggestion about the amendment. However, the main reasons that can result in the amendments in the tax group are as follows:

  • If the companies that are a part of the tax group are related to the conductance of similar activities, and they meet the requirements of the federal tax authority, then the tax group is eligible for amendments. 
  • If the companies that are a part of the tax group fail to stand up to the requirements set by the federal tax authority, then these companies would be considered ineligible, and they would be removed from the tax group.

Who could be added and removed from a tax group?

The representative member of the tax group has the power to welcome a new member into the tax group. However, there are specific criteria that need to be checked before any new member could be added to the tax group. This is required to be done so as to ensure that the new member fulfils the criteria and could become a prospective member of the given tax group. A few of these criteria include the following:

  • The new member must be regarded as a legal entity
  • The new member is the resident in the Dubai
  • The new member should not be a present member of any other tax group

If the prospective member of the tax group fulfils these criteria, then that entity could be added as a member of the tax group.

Anyhow, the process of removal of a member from the tax group is quite simple and hassle-free. The following steps are followed while removing a member from a tax group:

  • When you go on to make an amendment in the tax group, there will be a list in which the names of all the members of the tax group along with their details would appear. 
  • You need to select the name of the member of the tax group that you wish to remove.
  • After you have selected the name of the member of the tax group that you wish to remove, you need to click on the OK button to confirm your action and the selected member would be removed from the tax group.

Being a member of a tax group is a significant decision that needs to be taken by the company itself, but if this decision is not made in time, it could hamper the company in the long run. Being a member of a tax group has certain perks and benefits that can help a lot when it comes to filing for the taxes. But it is always important to have a good understanding of the rules and the regulations about the taxation process so that you do not end up paying more than necessary.

The evolution of the tax groups has provided a boon to the businesses by simplifying the accounting processes and has also improved the economy of the country.

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