VAT Registration for Tax Group in the UAE
What is a Tax Group in VAT?
For the UAE VAT Registration, two or more persons performing businesses may apply for Tax Registration as a ‘Tax Group’. A tax group is a group of two or more persons registered with the FTA as one (single) taxable person subject to completion of conditions under UAE VAT Law.
The corporations operating in the UAE, who are taxable, use the group registration method for VAT. This is done to prevent the expenses of multiple registrations & to streamline procedures. The UAE permits several companies to form a group of single common control to register for the VAT. Two or more companies will attain a single VAT number under the group registration, which makes the course more effective. Nonetheless, only a single delegated member from the group is authorized to file the VAT returns & payments on behalf of the group.
Under the Tax group registration obligation, the representatives are counted as a single taxable unit. However, the members are collectively & respectively accountable for all VAT debts & other such commitments of the group for the duration through which they were members. If an existing company leaves a tax group, even then, that company would still be responsible for the period of membership. The request for forming a tax group must be made by a member who is primed to become the representative of the group.
Who is Eligible to Form a VAT Tax Group?
To be qualified for VAT Group registration the given below conditions must be complied with:
- Each integral member of the VAT group must be a corporation;
- Individuals are not entitled to VAT Group registration & can’t create a VAT group;
- Each member must be related party, which means they must share economic or financial ties;
- Each constituent member of the VAT group must be resident in the UAE;
- The member should not already be a part of another existing Tax group;
How to Form a Tax Group in the UAE?
The Federal Tax Authority (FTA) accepts only a representative member of a potential Tax group to form a Tax group. The representative member requires to present a VAT registration application at the time of requesting to form a Tax Group. The FTA then will issue a Tax Registration Number (TRN). This respective member is only permitted to hold an existing TRN for VAT purposes at the time of application. It is to confirm that Tax group members are not registered separately or as part of another Tax group. The representative member must make sure that multiple or duplicate applications are not presented to the FTA.
It is also important that a single company or two companies can have power over the entire Tax Group. However, the FTA has recorded certain criteria if the group control is in the power of more than one enterprise. In such cases, where two companies are involved, then a formal partnership agreement is made; where either of the following terms are required to be met,
- a voting interest in those companies of at least 50% when added together;
- a market value interest in each of those businesses of at least 50% when added together;
- control by any other means;
Information Required for Forming a Tax Group
The registration for establishing the VAT group can be made online through the FTA portal. The application requires to be submitted by the representative member who controls the group. The following information is required to be submitted while applying for group registration
- For Each Member of the Group
– Trade License
– Certificate of Incorporation (If Applicable)
– Articles of Association/ Partnership Agreements
– Authorized signatory documents
– Financial statements or other documentation to support financial transactions
- For the Tax Group
– Group structure/ documents indicating group control
– Documents to show members are related parties (group structure/group financial statements)
– Financial statements
– Power of Attorney/ Board Minutes in favor of group controller
- For the Group Controller
– Trade License
– Passport & Emirates ID
– Authorized signatory documents
Benefits of registering as a Tax Group
- All the entities within a VAT Group will be treated as a ‘single’ entity for VAT purposes. This will help the companies in simplifying accounting for VAT, & also compliance reporting, for example, VAT returns are essential to be arranged & reported at the group level instead of the entity level.
- Any resources within the bodies of a VAT group are out of the scope of the VAT. This means VAT will not be levied on the supplies between the entities of a VAT Group. However, supplies made by the VAT group to an entity outside the VAT group are subject to VAT.
- A representative member can pay any VAT imposed on the imports of goods made by any other member
- There is a stipulation to change the members of the group or change the manager. This means any member can be dismissed or a new member can be added at any time.
How can we help?
Brooks Management Consultancies is an FTA Certified Tax Agency in Dubai, UAE, that provides unbeatable tax filing and returns services to companies. We have a fixed fee structure for local and international clients. Our tax agents focus on maintaining cordial and long-term relationships with our clients. Our agency has structured its fee and operations that will benefit our clients, whether individuals or companies.
At Brooks, we understand you may not get time to look after your tax matters. So, we provide the experienced and best tax agents who will help you with documentation to filing work and make you aware of UAE accounting laws’ latest changes. Our tax agents are proficient in the Arabic language, so any FTA document in the native language will be easily interpreted.
Brooks Management Consultancies can help with the administration of VAT in your business, to ensure you comply with the new requirements such as:
- How to charge VAT on supplies at the correct rate
- How to calculate VAT deductible on purchases
- How to calculate the overall net amount to pay and refund the VAT
- Submitting VAT and returns showing the required information
- Paying the net amount of VAT due within the prescribed deadlines
Keeping the correct documentation in relation to invoices, records, accounts, and VAT returns.
Contact our VAT consultant today!