VAT Group Registration in the UAE

Value Added Tax (VAT) is a tax applied to most goods and services in the UAE. Introduced in 2018 at a standard rate of 5%, VAT requires businesses to register, collect, and pay taxes to the Federal Tax Authority (FTA). While businesses usually register for VAT individually, companies that have multiple related businesses can choose VAT Group Registration to simplify their tax process.

VAT Group Registration allows two or more businesses under the same ownership or control to register as a single entity for VAT purposes. This means transactions between these companies are not taxed, making VAT reporting and payments easier. It helps businesses reduce paperwork, save time, and improve cash flow.

If your business has multiple related entities, VAT Group Registration can be a smart choice. So, let us explain what VAT group registration is, who can apply, how to register, and why it can be beneficial for your company.

What is VAT Group Registration in UAE?

VAT Group Registration is a system that allows two or more businesses with shared ownership or control to register as a single taxable entity under UAE VAT law. Instead of each company handling VAT separately, they operate as one unit for tax purposes. This helps businesses simplify VAT compliance, reduce paperwork, and avoid unnecessary tax on transactions between group members.

Articles 9 & 10 of Cabinet Decision No. (52) of 2017 on the executive regulations of the Federal Decree-Law No. (8) of 2017 on VAT detail the rules for VAT Group Registration, including the requirement for common control and financial links between group members.

Key features and benefits of VAT Group Registration:

• One VAT Return for All – Businesses in the group file a single VAT return, reducing paperwork and chances of mistakes.
• Transactions between registered group members are not subject to VAT, reducing unnecessary tax payments.
• Saves Time and Effort – Managing VAT for multiple businesses becomes easier and less stressful.
• Avoiding VAT on intra-group transactions can improve cash flow and reduce financial strain.
• Businesses can optimize their VAT position and reduce compliance risks.

How It Differs from Individual VAT Registration

In individual VAT registration, each business must register separately, file its own VAT returns, and pay VAT on transactions with other businesses, even if they are related. This can lead to complex tax management and higher administrative costs.

With VAT Group Registration:

• Businesses within the group do not need to charge VAT on transactions between them.
• Only one VAT return is filed for the entire group.
• The group is treated as a single taxable entity, making tax reporting more efficient.

UAE VAT Group Registration Conditions & Eligibility

VAT Group Registration is not available to all businesses. To qualify, companies must meet certain criteria set by the Federal Tax Authority (FTA). Businesses that meet the following conditions can apply for VAT Group Registration:

• The businesses must be related through shared ownership, meaning they have the same controlling entity or person. This could be a parent company and its subsidiaries or businesses owned by the same shareholders.
• Each entity in the group must be registered for VAT or be eligible for VAT registration under UAE tax laws. If one entity is not eligible for VAT, it cannot be included in the VAT group.
•  All businesses applying for VAT Group Registration must be operating and conducting taxable activities within the UAE. Companies that only have foreign operations without UAE-based transactions cannot be part of a VAT group.
• Businesses with a history of VAT fraud, tax evasion, or serious non-compliance issues may not be eligible for VAT Group Registration.

Relationship Requirements Between Group Entities

To form a VAT group, the businesses must have a legal and financial relationship. The FTA considers the following factors:

1. Common Control

One entity or person must have direct or indirect control over all the businesses within the group. Control is typically determined by ownership structure, voting rights, or decision-making authority.

2. Shared Ownership Structure

At least 50% of the ownership should be common among the entities applying for VAT Group Registration. This ensures that the businesses operate as a single economic unit.

3. Active Business Operations

Entities included in the VAT group must be engaged in ongoing taxable business activities. Inactive or dormant companies may not be eligible.

4. Same VAT Accounting Period

All businesses in the group must follow the same VAT return filing schedule. Different reporting periods can create complications in tax compliance.

Documents Required for VAT Group Registration in UAE

To successfully apply for VAT Group Registration, businesses must provide the following documents:

• Trade license copies for all businesses included in the VAT group
• VAT Registration Certificates (If the businesses are already VAT registered)
• Passport copies of business owners
• Emirates ID copies
• Proof of common control/ownership Memorandum of Association (MOA) & Articles of Association (AOA)
• Group organizational structure chart
• Latest financial statements
• Authorization letter

How to Register for VAT Group Registration in the UAE?

UAE VAT Group Registration is a straightforward process managed by the Federal Tax Authority (FTA). Businesses that meet the eligibility criteria can apply online through the FTA’s e-Services portal.

Here is a step-by-step process on how to register a VAT group, along with the required documents:

1. Ensure Eligibility

Before starting the application, businesses must verify that they meet the eligibility criteria for VAT Group Registration:

• The entities must be legally related (e.g., parent-subsidiary relationship or common shareholders).
• Each business must have a valid trade license issued by UAE authorities.
• The group members must be VAT-registered or eligible for VAT registration.
• The businesses must have active operations in the UAE with taxable supplies.
• There should be no history of major VAT non-compliance or violations.

2. Register for an FTA e-Services Account

If the businesses are not yet registered for VAT, they need to first complete their individual VAT registrations before applying for VAT Group Registration.

1. Visit the FTA e-Services portal: https://eservices.tax.gov.ae
2. Create an account using a valid email ID and password.
3. Log in and complete the standard VAT registration for each business entity.
4. Once VAT registration is done, you will receive a Tax Registration Number (TRN) for each entity.

Only after obtaining a TRN can businesses apply for VAT Group Registration.

3. Initiate the VAT Group Registration Application

1. Log in to the FTA e-Services Portal using the credentials of the business that will be the Representative Member of the VAT Group.
2. Navigate to the VAT Group Registration section and click on “New VAT Group Registration.”
3. Read the guidelines carefully before proceeding with the application.

4. Provide Business and Ownership Details

At this stage, businesses need to provide detailed information about the entities applying for VAT Group Registration.

• Representative Member: Select the business that will be responsible for submitting VAT returns and payments on behalf of the group.
• TRNs of Group Members: Enter the Tax Registration Number (TRN) of each business in the group.
• Legal Relationship: Describe how the businesses are related (e.g., common ownership, parent-subsidiary, or shared financial control).
• Business Activities: Provide details on the nature of the businesses’ operations and taxable supplies.

Important Note: The representative member will be legally responsible for VAT compliance, including filing returns and making VAT payments. Businesses should carefully choose the entity that will take on this role.

5. Upload the Required Documents

Submit the necessary documents (listed below) to support the application. All documents should be in PDF or JPG format and must be clear and valid.

6. Review and Submit the Application

Before submitting the application, carefully review all details to ensure accuracy. Verify that the TRNs of all group members are correctly entered. Ensure that the representative member details are accurate.

7. FTA Review and Approval Process

Once submitted, the FTA will review the application, which may take several weeks. The FTA will:

• Verify the legal and financial relationships between group members.
• Assess whether the businesses meet the eligibility criteria.
• Check the tax compliance history of all group members.
• Request additional information or documents if needed.

If the application is approved, the VAT Group will be assigned a single VAT Group Tax Registration Number (TRN). If the application is rejected, businesses will receive an email explaining the reasons for rejection and any corrective actions required.

8. Receive VAT Group Registration Certificate

Upon approval, the FTA will issue a VAT Group Registration Certificate, confirming the VAT group’s status. This certificate will include:

• The VAT Group TRN (which replaces individual VAT numbers for VAT filing purposes).
• Details of all group members.
• The effective date of VAT Group Registration.

From this date onward, the VAT Group must submit a single VAT return for all members, with the representative member responsible for compliance.

Benefits of VAT Group Registration in UAE

VAT Group Registration allows multiple businesses under common ownership or control to register as a single taxable entity for VAT purposes. Here are the key advantages of VAT Group Registration in the UAE:

1. Simplified VAT Compliance

Instead of multiple businesses filing separate VAT returns, the VAT Group submits a single consolidated VAT return. This reduces paperwork, saves time, and ensures easier tax management.

2. No VAT on Intra-Group Transactions

When businesses within a VAT Group transact with each other, VAT is not charged on these transactions. This helps improve cash flow and simplifies internal invoicing.

3. Cost Savings on VAT-Related Expenses

With fewer VAT filings and reduced transaction costs between group members, businesses can save money on VAT compliance. Additionally, hiring VAT consultants or accountants becomes more cost-effective when managing a single VAT account instead of multiple ones.

4. Improved Cash Flow Management

Since VAT is not charged on transactions within the group, businesses can manage their cash flow better and avoid unnecessary tax payments. This is especially helpful for businesses dealing with high volumes of transactions.

5. Centralized VAT Management

With VAT Group Registration, the representative member of the group manages VAT-related responsibilities. This ensures better control and oversight over tax compliance.

6. Stronger Tax Position and Compliance

By consolidating VAT compliance under one group, businesses reduce the risk of individual VAT errors and ensure that they meet regulatory requirements in a streamlined manner. The Federal Tax Authority (FTA) views VAT Groups as structured entities, reducing the chances of audits or compliance issues.

How Shuraa Tax Can Assist with VAT Group Registration

VAT Group Registration in the UAE is a smart choice for businesses with multiple entities under common ownership. It simplifies tax filing, reduces administrative work, and helps businesses save money by avoiding VAT on transactions between group members. Instead of managing separate VAT accounts for each entity, companies can file one VAT return for the entire group, making tax compliance easier and more efficient. Additionally, VAT grouping improves cash flow management by eliminating unnecessary VAT payments within the group.

However, businesses must meet specific eligibility criteria and follow the correct process to register successfully. This can sometimes be complex, requiring accurate documentation and compliance with Federal Tax Authority (FTA) regulations.

At Shuraa Tax, we provide end-to-end assistance with VAT Group Registration, from checking your eligibility and preparing documents to submitting the application and ensuring compliance with UAE tax laws. Our team of VAT experts will guide you through the process, help you avoid penalties, and provide ongoing VAT support to keep your business tax compliant.

Get in touch with Shuraa Tax today for expert guidance on VAT Group Registration in the UAE.

FAQs

1. What is VAT Group Registration?

VAT Group Registration in UAE allows multiple businesses under the same ownership to register as a single entity for VAT purposes. This simplifies VAT compliance, reduces administrative tasks, and eliminates VAT on transactions between group members.

2. Who is eligible to apply for VAT Group Registration?

UAE businesses with shared ownership or control, such as parent-subsidiary relationships, and those that are VAT-registered or eligible for VAT registration, can apply. All members must be conducting taxable activities in the UAE.

3. How does VAT Group Registration benefit my business?

It reduces paperwork by consolidating VAT returns, improves cash flow by eliminating VAT on internal transactions, and centralizes VAT management under one representative member, saving time and costs on tax compliance.

4. How can I apply for VAT Group Registration?

To apply, businesses must be VAT-registered, meet the eligibility criteria, and submit an application through the Federal Tax Authority (FTA) e-Services portal with required documentation, including ownership proof and financial statements.

5. What happens after applying for VAT Group Registration?

After submission, the FTA will review the application. If approved, the VAT group will be issued a VAT Group Registration Number and must begin filing a single VAT return for the entire group.