The recent VAT amendment by the Federal Tax Authority (FTA) is a significant improvement for tax registrants in the UAE. The new option allows businesses to change the legal type of their entity directly in the Emaratax portal, without the need for deregistration and re-registration. This update simplifies the process considerably, avoiding the previously required steps that were not only complex but also time-consuming.
What was the earlier option & problems faced?
Before this amendment, if an entity was registered with the wrong legal type, the only option was to deregister the existing VAT account and re-register with the correct legal type. This process led to the issuance of a new Tax Registration Number (TRN), necessitating changes to business documents like invoices and adjustments in accounting software. The complexity and time involved in this process caused operational disruptions for businesses and, in some cases, led to penalties for non-compliance.
About the new option and required documents to submit the application
FTA has introduced a new option now to change the legal type of the entity straightforward without doing Deregistration and Reregistration if the VAT registration was wrong by selecting wrong legal type. This new option enables taxpayers to amend their entity’s legal type without much complication and without spending more time during the process.
The following are the required documents for Legal type change
- A proof of a change in your entity type
- If you are changing your entity type to “Natural person”
- Emirates ID/Passport of the taxable person
- Trade license
- If you are changing your entity type to “legal person or partnership”
- Certificate of incorporation
- Trade license
- Emirates IDs, Passports and Trade licenses of owners/partners
It’s important to take immediate action if your entity has been registered with the incorrect legal type in the Emaratax portal. The recent VAT amendment by the FTA provides a convenient way to update the legal type directly in the portal, but only for cases where the entity was mistakenly registered with the wrong legal type initially.
However, it’s crucial to understand that if your business has undergone a formal change in its legal structure, such as changing the entity type from a Sole Establishment to an LLC (and vice versa), or from a Civil Company to a Sole Establishment (and vice versa) or any other legal type change, the new amendment will not suffice. In these cases, the process remains the same as before: you will need to deregister the old entity and re-register the new entity under its new legal type. This is necessary because the fundamental legal structure of the business has changed, which requires a new VAT registration and TRN.
How Spectrum can help you?
To avoid potential compliance issues and ensure that your VAT registration is accurate, it’s recommended to update your details in the Emaratax portal as soon as possible. If you need help navigating this process, feel free to reach out. Professional assistance can ensure that your updates are made correctly and efficiently, minimizing the risk of any penalties or disruptions to your business operations.
Contact us today for a consultation at +971 4 2699329 or email [email protected] to get all our queries addressed.
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