Implications of VAT Registration for UAE Sole Establishments

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Implications of VAT
Registration for UAE Sole Establishments
Parsh Accounting and Bookkeeping
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Natural persons having a variety of business
establishments can follow the provisions of sole
establishments under UAE VAT law to optimize
their time and efforts in completing the VAT
Registration functions. Federal Tax Authority
has published special guidance with respect to
sole establishments which is further discussed
in detail below.
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Sole establishment under UAE VAT law

• 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 doesnt 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 are considered.

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Is VAT registration mandatory for sole
establishments?
The requirement for VAT registration depends upon
the volume of taxable supplies and FTA has
specified threshold limits for both mandatory
and voluntary tax registrations. Any natural
person owning sole establishments shall assess
the quantity of his/her taxable supplies,
considering all the establishments together, to
match with the registration thresholds. Once the
sum of the number of taxable supplies of all the
sole establishments exceeds or is predicted to
exceed the mandatory registration threshold which
is AED 375,000 once a year, VAT registration
should be obtained
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Should each of the sole establishments 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 registration
is required for every one of the only
establishments.
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Is filing of VAT return compulsory
for sole 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. VAT returns
can be filed using the e-portal service
facilitated by Federal Tax Authority. For
further clarifications regarding the filing of
VAT returns,
feel free to contact Parsh Accounting and
Bookkeeping.
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Should each of the sole establishments file VAT
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 arent 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 due shall also be calculated during this
consolidated level supported by the declared
amounts of transactions in the VAT return.
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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
FTA on registration and reporting requirements
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, FTA shall be notified on time as
laid out in the tax regulation. Especially while
incorporating new establishments, tax
regulatory responsibilities shall be revisited to
make sure compliance with the requirements in
every aspect.
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Conclusion
Hope youve got a transparent idea of the
implications of VAT registration in Dubai sole
establishments. Still, have queries regarding VAT
registration of sole establishment in Dubai?
Contact Parsh Accounting and Bookkeeping, we are
happy to discuss with you the recent developments
in the context of tax rules and provide you with
insights on implementing the best practices in
the region.