VAT – TAX Groups
Who is eligible to form a Tax group?
To be eligible to form a Tax Group, each member constituent has to fulfill the following criteria:
- Business criteria – each member must be operating a business
- Legal person criteria – each member of a Tax group must be a legal person (i.e. they must be a company or similar). A natural person (i.e. an individual) cannot create or join a Tax group
- Establishment criteria – each member must be resident in the UAE, either by way of having its primary business establishment or as a consequence of having a fixed establishment in the country.
- Related parties (and control) criteria – each member must be related to the other (i.e. share economic, financial and organizational ties).
Definition of Control Criteria:
- One person must be able to control the members; or
- Two Legal persons with one or more than one person is acting in a formal partnership agreement
- Has minimum 50% voting interest in the combined entities
- Market value interest in each entity of minimum 50%
- Has any other legal authority to control
- Each legal person is related to a third legal person
|Advantages of forming a Tax group: The members of the Tax group are treated as a single taxable person for VAT purposes.|
NOTE: It is important to note that members of a Tax group are jointly and severally liable for any and all VAT debts and other such obligations of the group for the period during which they were members. That means that even when a business has left a Tax group, it remains liable for the period of membership.
An application to form a Tax group must be made by the prospective member that will become the Representative Member of the group.
The VAT registration requirements for the purposes of forming a Tax group can be satisfied where each prospective member alone satisfies the relevant registration requirements.
|Do you know? By using Tax group Amendment form, you can make any kind of changes to the composition of a Tax group (Example: to add or remove members from group, change representative member or disband a tax group)|
It is mandatory to complete Tax group application form even if you already have a Tax Registration Number (TRN) for VAT. Once the application is processed successfully, you will be allotted a different TRN which must be used by the Tax group. All specific services pertaining to the Tax group will also be available for reference in the mentioned group TRN account.
|Keep in mind, if you are part of a Tax group, then each member has to apply for TRN separately and they have to apply for tax group registration later. Upon your application, FTA will review and issue one single TRN for the group.|
NOTE: Incorrect information provided during registration is subject to penalties.
Information required to complete Tax group registration application: The required documentation will vary depending on the profile of the applicant. Below is a guide showing the types of documents that may be requested, depending on the legal status of the applicant.
|For each of the proposed members of the Tax group that have not previously been registered for VAT purposes||For the Tax group||For the group controller|
|Trade License(s)||Group structure (or other documents indicating group control)||Trade License (if applicable)|
|Certificate of Incorporation (if applicable)||Supporting documentation that the Tax group control conditions have been met and the group members are related parties (e.g. group structure, group financial statements, or other)||Passport and Emirates ID|
|Articles of Association / Partnership Agreements|
|Financial Statements or other documentation to support financial transaction values provided||Authorized Signatory documents|
|Authorized Signatory documents (including for the Representative Member)||Authorizing documents from the group members or group controller to the Representative Member to submit the Tax group forms and act on their behalf (e.g. Power of Attorney, board minutes or other)||Authorized Signatory documents|
|Financial Statements or other documentation to support financial transaction values provided||Authorizing documents from the group members or group controller to the Representative Member to submit the Tax group forms and act on their behalf (e.g. Power of Attorney, board minutes or other)||Authorized Signatory documents|
Note: Additional documents may require for registration of individual group member with FTA.