VAT Groups under UAE Law Aviaanaaccounting

What are VAT Groups in Dubai?

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As per Dubai VAT Laws, one person is allowed to have only one registration. Supposedly, if a person is operating in branches, in such case also he is allowed only to have one registration. But what if two or more related or associated persons work for similar objective, there comes the concept of Group registration. Therefore, two or more persons carrying on business together can apply for VAT registration as a Tax Group. The person associated here can be registered as a group only for tax purpose. It may also happen that, if related parties do not apply for group registration, then tax authorities will identify them and register them as group. All entities in a group are jointly and severally Liable for VAT Liabilities.

Conditions to be Satisfy

Any person or group of person, who wishes to be registered as a VAT group needs to satisfy all of the below mentioned conditions as specified by FTA:

  1. Each of them has a place of establishment or fixed establishment in the UAE.
  2. They should be related parties as per VAT law.
  3. One or party in the group must have control over the other i.e. atleast one must have controlling power. (Common Control)

The persons associated must be engaged in one or more of the following business practices:

  1. Economic Practices.
  2. Financial Practices.
  3. Regulatory Practices.

Benefits

A person or a group of person who register under UAE VAT Law as a Group tax, has the following benefits:

  1. All entities will have to file a single return. As all be treated as ‘ONE’.
  2. Compliance also needs to be made at group level, which in turn reduces the work load significantly.
  3. Supplies within group will not be charged any VAT i.e. suppliers between entities within a group are not under the purview of VAT.
  4. It will save cash outflow, hence economical and less time consuming.

PROCEDURE

To get registered as a GROUP, following are the steps for the same:

  1. Create your e-services Account.
  2. Verify your account.
  3. Register as a Tax Group
  4. Login to e-services account.
  5. Click at “Register for VAT” Button.
  6. Click Yes for “ Are you also applying to create or join a Tax group”
  7. Complete the procedure to get TIN issued by FTA.
  8. As a member, an invitation to join the group will be available at your respective dashboard. Click Yes.
  9. You can also add members to the group.

FTA will approve or reject the group within 20 business days.

However, if the group is approved then, it shall be effect from:

  1. 1st day of the tax period during which registration is applied.
  2. Any date as determined by FTA.

Grounds of Rejection

  1. If the person do not meet the conditions required for registration.
  2. If is believed on serious grounds that, registration is taken to evade tax or decrease revenue of tax authorities.
  3. If any person in the group is not legal person.
  4. If a person is a Government entity, and the other person is not.

Amendment

For the ease of taxpayer, the details of the Tax Group can be amended by only the representative member of the group. This can only be done after approval of the group by FTA.

Following amendments can be made:

  1. Addition of a new member.
  2. Removal of a member.
  3. Amendment of tax group details.

De-Registrations:

FTA may , when desirable and required, can de-register a Tax Group in existence, on the following grounds:

  1. If the Tax Group formed, no longer meet the requirement of forming the group.
  2. The economic, financial or regulatory practices are no longer in existence.
  3. On serious grounds that, the Tax Group is formed to evade tax and decrease the revenue of tax authorities.

The group will be served a notice within 10 days if such action is taken by the authority or else the representative member of the group will intimate the FTA within 20 days of ceasing of such group.

For more information on this topic, please visit our Insights Section or Contact Us.

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