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Implications of VAT Registration for UAE Sole Establishments

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.

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 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 are considered.

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.

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.

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.

Should each of the sole establishment’s 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 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 due shall also be calculated during this consolidated level supported by the declared amounts of transactions in the VAT return.

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.

Consequences of non-compliance with the VAT registration and reporting requirements relating to sole establishments

It is always recommended to consult a tax expert to make sure compliance with the regulatory requirements. What if a natural person omits the responsibilities regarding registration and reporting? There are often circumstances where an individual missed to think about one of his sole establishments while evaluating the taxable supplies to match with the VAT registration threshold or another scenario of wrong calculation of outstanding VAT payable. In any such situation, the natural person shall notify FTA through voluntary disclosure or other procedure as applicable to prevent any non-compliance with the tax and Bookkeeping service and to avoid further consequences such as penalties.

How Parsh Accounting and Bookkeeping can help you in tax and accounting-related activities of your sole establishments?

Are you getting bury with managing your multiple business concerns and their respective regulatory requirements? Parsh Accounting and Bookkeeping has dedicated professionals in each of the competencies such as accounting, tax, audit, and compliance who can assist you in carrying out your business transactions in a systematic and controlled environment. We have subject-based experts who can guide you in understanding and fulfilling your regulatory responsibilities ranging from registration to periodic reporting to the authorities.

Hope you’ve 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.

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