Implications of VAT Registration for UAE Sole Establishments

1. Implicationsof VAT Registration for UAE Sole Establishments Parsh Accounting andBookkeeping

2. Naturalpersonshavingavarietyofbusinessestablishmentscanfollowthe provisionsofsoleestablishmentsunderUAEVATlawtooptimizetheirtime and efforts in completing the VAT Registration functions. Federal Tax Authority has published special guidance with respect to sole establishmentswhichisfurtherdiscussedindetailbelow.

3. Sole establishment underUAE VATlaw A sole establishment is described in other words as a sole proprietorship that is 100% owned by a natural person. It is a kind of ownership legally allowed for business and therefore the sole establishment doesn’t carry another legal identity different from its owner. A natural person can own more than one sole establishment and every one of the sole establishments under a natural person put together are going to be considered because the same because the natural person when tax formalities areconsidered.

4. IsVATregistrationmandatoryforsole establishments? The requirement for VAT registration depends upon the volume of taxable supplies and FTA has specified thresholdlimitsforbothmandatoryandvoluntarytax registrations. Any natural person owning sole establishments shall assess the quantity of his/her taxable supplies, considering all the establishments together,tomatchwiththeregistrationthresholds. Oncethesumofthenumberoftaxablesuppliesofall the sole establishments exceeds or is predicted to exceedthemandatoryregistrationthresholdwhichis AED 375,000 once a year, VAT registration should be obtained

5. Should each of the soleestablishments register for VAT separately? A natural person owning multiple sole establishments must obtain just one VAT registration on behalf of all his establishments. Hence no separate registrationisrequiredforeveryoneofthe onlyestablishments.

6. Is filingofVAT returncompulsory forsole establishments? All VAT-registered entities including registered natural persons who have sole establishments should file the periodic VAT returns with Federal Tax Authority. Whether to file the VAT return monthly or quarterly are going to be notified by FTA, once registered.VATreturnscanbefiledusingthe e-portal service facilitated by Federal Tax Authority.Forfurtherclarificationsregarding thefilingofVATreturns, feelfreetocontactParshAccountingand Bookkeeping.

7. Should each of thesole establishments fileVAT return separately with FTA? Once VAT registered, all of the sole establishments of a natural person are going to be assessed together as a taxable entity and hence separate VAT returns aren’t required. Each registrant person can submit one VAT return for every tax period as applicable and declare the transactions of registrant establishments in a consolidated manner. Outstanding tax payable or refund dueshallalsobecalculatedduringthisconsolidatedlevel supportedbythedeclaredamountsoftransactionsinthe VATreturn.

8. What are the guidelines to be followed by the owners of sole establishments? Owners of sole establishments are expected to stay updated about the clarifications issued by FTAonregistrationandreportingrequirements of sole establishments. They ensure all their sole establishments are considered while evaluating whether the number of taxable supplies in aggregate reaches the mandatory registration threshold. They shall make sure that there are no undeclared taxable supplies and just in case of any outstanding VAT corrections,FTAshallbenotifiedontimeaslaid out in the tax regulation. Especially while incorporating new establishments, tax regulatory responsibilities shall be revisited to makesurecompliancewiththerequirementsin everyaspect.

9. Conclusion Hopeyou’vegotatransparentideaoftheimplicationsofVATregistration inDubaisoleestablishments.Still,havequeriesregardingVATregistration of sole establishment in Dubai? Contact Parsh Accounting and Bookkeeping, we are happy to discuss with you the recent developments inthecontextoftaxrulesandprovideyouwithinsightsonimplementing thebestpracticesintheregion.