VAT Group Registration

In VAT Registration UAE, two or more businesses can choose to register as a "tax group" with the Federal Tax Authority (FTA). This group acts as a single taxable person under UAE VAT law, simplifying administration and reducing the VAT compliance burden. In this article, you can learn more about VAT tax groups, their eligibility criteria, and the registration process in the UAE.

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What is a VAT Tax Group in UAE?

VAT tax group allows multiple businesses to register as a single taxable person for VAT purposes. This means they share one VAT Tax Registration Number (TRN), file a single consolidated tax return, and don't pay VAT on transactions within the group. This reduces business costs and administrative burdens while protecting government revenue by minimizing potential tax avoidance risks.  Within a VAT tax group, transactions between members are VAT-free, eliminating cash flow issues and potential revenue risks for the government.

Benefits of VAT group registration

Simplified VAT Accounting: One VAT return is filed for the entire group, streamlining the process and reducing administrative burden compared to individual returns for each member.

• Elimination of Internal VAT Charges: Supplies made within the group are considered "outside the scope of VAT". No VAT is charged on transactions between members, simplifying internal transactions and cash flow.
• Inclusion of Exempt Supplies: Companies making exempt supplies (e.g., healthcare) can still join the group, potentially improving VAT recovery for the group as a whole.
• Enhanced Cash Flow Management: Group members can offset VAT liabilities against VAT credits within the group, potentially leading to faster VAT refunds and improved cash flow.
• Administrative Efficiency: Centralized management of VAT compliance for the group reduces duplication of efforts and saves time for individual companies.

Eligibility Criteria to form a VAT Tax Group Registration

The following criteria list must be fulfilled by each of the members of the VAT tax group.

• Business Activity: Each member must conduct regular business activity in the UAE and operate independently.
• Legal Status: Members must be legal entities (companies, government entities, etc.), not individuals.
• UAE Residency: Members must have either a primary or fixed business establishment in the UAE. A business establishment is a place where key management decisions are made, affecting the business, while a fixed establishment is a place where the necessary human and technical resources exist to carry on a business.
• Related Parties & Control: Members must be economically, financially, and organizationally connected, demonstrating common control. This means one or more members must hold majority ownership or control (50% or above) of the other members.

Note: The tax authority will review and approve applications only if all these criteria are met, ensuring the group is formed for legitimate simplification purposes.

Also read: What is the threshold for VAT registration in UAE?

How to Register for VAT group in UAE?

Below, you can find the simple steps to do the VAT tax group registration in UAE,

Step 1: Go to the FTA's website, sign up for an EmaraTax account and activate it

Step 2: Log on to your EmaraTax account dashboard

Step 3: Create a Profile for a New taxable person or click 'view' to see the taxable person if it is already registered

Step 4: Under the 'Tax group' section, click on 'Register'

Step 5: If you are the representative member, click 'Yes' to continue. If not, consult the FTA's guidelines since the registration process might differ.

Step 6: Follow the rest of the on-screen instructions to complete the VAT tax group registration process.

When can the UAE VAT tax group registration be cancelled?

The following instances can lead to the cancellation of VAT tax group registration in the UAE.

• If the businesses no longer meet the specific conditions outlined in the UAE's VAT Law and its Executive Regulations. It includes financial connections, geographical proximity, or a similar business nature.
• If the FTA suspects the tax group structure is being used to avoid or reduce VAT liability.
• One or more members of the tax group may request to be removed, leading to the cancellation of the group registration if the remaining members no longer meet the eligibility criteria.
• The Federal Tax Authority can independently decide to deregister or restructure a tax group if they determine it's not in compliance with the VAT regulations.

Learn more: How to get VAT registration in UAE?

Conclusion

Businesses with VAT registration UAE can form a VAT group to simplify VAT administration and reduce compliance burdens. This requires meeting specific criteria, registering with the FTA, and understanding potential cancellation scenarios. The key benefits of forming a VAT group include a single VAT return, no internal VAT charges, inclusion of exempt suppliers, improved cash flow, and centralized compliance management. However, seeking expert guidance with Filings.ae experts simplify the registration process for the VAT tax group in UAE. 

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