VAT Group Registration in the UAE

To make the process for businesses and individuals more straightforward, the VAT Law included group registration for tax returns. According to the Value-Added Tax Law of 2017, a Tax Group is defined as two or more individuals who are registered with the Federal Tax Authority (FTA) for tax purposes as a single taxable person. This statute allows two or more businesses to register as a single entity for the purpose of filing VAT payments or returns.  

With the help of tax agents, a group of businesses registers under the representation of one business or submits VAT or VAT returns on behalf of all group members. Tax group members are jointly responsible for paying VAT, filing VAT returns, and any VAT-related defaults. The group members are free to engage in any transactions within their group; they are not required to use a particular VAT accounting system. This system, sometimes known as group registration, is utilized in several nations. The VAT group shall be treated as a single business for the purposes of VAT. 

VAT group registration in UAE: What Is It?

The VAT method enables multiple businesses to register for VAT collectively. According to this clause, a group of multiple companies will all share a single VAT number. Firms with limited liability may choose to register as a group. 

‘Bodies corporate’ is the collective name for the VAT tax group. The group is essentially recognised as one taxable individual. The representative member’s name appears on the group VAT registration number. However, the group only utilises one consolidated accounting system, and in the event of a VAT debt or default, each member is held jointly and severally accountable. 

On behalf of his VAT tax group, the representative member is required to submit a single, consolidated VAT payment, return, and VAT returns. 

Advantages of the VAT Group

Group registration has a lot of benefits, but its main goal is to streamline the processes and save the expense of having several VAT registrations. The primary advantages of the VAT tax group registration are listed here. 

• Each VAT group may submit a consolidated VAT return. The administrative expenses have greatly decreased as a result. It is also possible to net off value-added tax payments and refunds.
• Any services or items supplied by one group member to another member are not subject to VAT. The VAT accounting and taxes do not imply such Intra Group Transactions operations.
• The representative member may be responsible for paying any applicable VAT on any member’s importation of goods.
• Another advantage is the flexibility to easily add or remove a business from the VAT group at any time. It is very simple to switch out the group representative or dissolve the group at any time. 

Preferred group registrations for VAT tax reduce individual costs and lower administrative expenses when distributed among returns, payments, and registrations.

Conditions for VAT group registration in the UAE:

To be eligible to apply for VAT Group registration, you must fulfill all of the following requirement.

Each individual must have an established establishment or place of business inside the State. This suggests that everyone in the UAE should own one of the following businesses: 

Legal Person:

The location where a company is formally established in the United Arab Emirates in accordance with its founding decision, or where it makes crucial management decisions and carries out central management functions. Each member of the group must be a legal person that is, not a natural person.  

Fixed Establishment:

Any fixed place of business, other than the place of establishment, where the person regularly or permanently conducts business and where sufficient human and technological resources exists to enable the person to supply or acquire Goods or Services. This also applies to branches, which authorities consider as fixed establishments. Each member must have a place of establishment or a fixed establishment in the UAE 

The pertinent individuals must be Related Parties:

In this context, “related parties” denotes two or more individuals who lack geographical, economic, or legal separation, and one has the ability to exert control over the others, whether through the acquisition of stock or voting rights, among other means.

In a partnership, one or more partners must have power over the others:

This suggests that a related person or persons control the other business. For instance, serving as one another’s partners or executives on their boards of directors, etc. 

Understanding the Significance of Not Being a Member of Another Tax Group for VAT Purposes

In many countries, businesses have the option to form tax groups for VAT purposes, which can have various advantages, such as simplified reporting and reduced administrative burdens. However, it’s crucial to recognize the significance of not being a member of another tax group for VAT purposes, as it comes with its own set of implications and considerations. 

How to register as a VAT group registration in UAE

Companies Applying for VAT group registration must first choose one of them to serve as the representative member. Using the online tax group form, the chosen representative member can then submit an application to the authority to register the tax group.  The application form must be accompanied by several documents, depending on the members’ legal status and profile, including the group structure, trade licences, incorporation documents, financial statements, and documents proving each member’s right to sign on behalf of the group.  

As per the law:

The Authority may refuse the application for registration as a Tax Group, in any of the following cases: 

a. The Persons do not meet the requirements for Tax Group registration in accordance with the provisions of the Decree-Law and Article 9 of this Decision (if the group members are not related parties). 

b. If there are substantial reasons to believe that permitting registration as a Tax Group would enable Tax Evasion or significantly reduce Tax revenues for the Authority or significantly increase the administrative burden on the Authority;

c. Where any of the Persons included in the application is not a legal Per son. 

d. Where one of the Persons is a Government Entity specified under Article 10 and 57 of the Decree-Law and the other is not. 

e. Where one of the Person is a Charity under Article 57 of the Decree-Law and the other is not. 

Yes, it is possible for the authorities to reject the application for registration as a VAT Group entity   The following are examples of instances that are specified in the VAT regulation: 

• The applicants do not fulfil the criteria listed above for registration as a tax organisation.
• This registration raises any potential for tax avoidance.
• The group members cannot establish a VAT Tax Group if their combined taxable supplies, imports of relevant goods, and imports of relevant services fall below the mandatory registration threshold.
• In the following instances, authorities may prohibit the formation of a VAT Tax Group:

1. So, Where one member is a charity under Article 57 of the Decree-Law and the other is not 

2. Where one member is a Government Entity specified under Article 10 and 57 of the Decree-Law and the other is not 

How Shuraa Tax can assist in VAT group registration in the UAE?

To simplify the process for businesses and individuals, the VAT Law included group registration for tax returns. In accordance with Federal Decree-Law No. 8 of 2017, a Tax Group refers to the grouping of two or more individuals or entities registered with the Federal Tax Authority (FTA) for tax-related matters, treated as a single taxable entity.

Shuraa can assist you in the following ways: 

• So, To complete the application for UAE tax group registration.
• However, To determine if you qualify to apply for registration.
• To help you understand what information you must have on hand to finish the application.
• Therefore, To answer your questions regarding the effects of tax group registration in the UAE.
• Will assist you with vat-related files and activities following your registration as a tax organisation in the UAE.
• To achieve compliance with FTA requirements and other statutory rules in the UAE, it is necessary to consolidate the accounting transactions and conduct the inter party adjustments within the tax group. 

We are confident that you now grasp the significance of submitting an application for tax group registration in the UAE You might still consider reaching out to Shuraa for a free consultation to address your concerns regarding the tax group in the UAE. You can contact us by sending an email to info@shuraatax.com or by giving us a call on +971 508912062.