What is VAT group registration?

In the UAE VAT registration, two or more persons engaged in business can apply for tax registration as a tax group. A tax group is a group of two or more people who are registered as a single taxable person in the free trade zone, but they must meet the conditions set by the UAE VAT Law. This group registration is for tax purposes only.

Conditions for applying for VAT group registration

To meet the conditions for applying for VAT group registration, all the following conditions must be met.

1. Everyone should have a business office or fixed business office in this state:

This means that everyone should have any of the following business offices in the UAE:

Place of establishment: The place where the company is legally established in the UAE according to its establishment decision, or where major management decisions are made and central management functions are performed.

Fixed place of business: Any fixed place of business other than the place of business in which the person conducts business regularly or permanently and has sufficient human and technical resources to enable the person to provide or obtain goods or services. This includes branches and is also considered a fixed institution.

2. The relevant personnel are related parties:

The related party here refers to two or more people who are not separated at the economic, financial or regulatory level. One of them can control others by law or by purchasing shares or voting rights.

3. One or more persons in the partnership shall control others:

This means that one or more related people control another business. For example, senior managers or directors of each other’s business, partners of each other’s business, etc.

VAT group registration map

VAT group registration

As shown above, Mr. Abdul is a director of Rose Trading Ltd and a partner of A-One Trading Ltd. Mr. Rizwan is a director of A-One Trading Ltd. In addition, Mr. Rizwan is a partner of Rose Trading Ltd. Therefore, as long as the conditions are met, Mr. Abdul and Mr. Rizwan will be regarded as related parties and eligible to apply for VAT group registration.

VAT group registration rights

The following are the benefits of VAT group registration for businesses

i. All entities in the VAT group will be considered “one” entity. This will help companies simplify the accounting for VAT, and also need to prepare and report compliance reports (such as VAT returns) at the group level (rather than the entity level).

ii. Any supplies within the VAT group entity are excluded from the VAT scope. This means that supplies between VAT groups will not be subject to VAT. However, goods provided by the VAT group to entities outside the VAT group are subject to VAT.