All You Must Know About De-Registration Tax Group in the UAE
02

Apr 2020

The United Arab Emirates (UAE) has effectively implemented Value Added Tax (VAT) across the Emirates. There has been a good percentage of agreement by the businesses that prove that the tax system is a definite asset in the country.

What is a Tax Group?

A tax group consists of two or more parties that are taxed as one entity. A tax group is seen as one organisation. Although this seems to be what firms should go for, they cannot merely form a tax group as there are requirements in the VAT law that would only allow a few that meet the needs and circumstances to be a tax group.

According to the Federal Decree-Law Number 8 of 2017 or more frequently known as the VAT Law, Tax Group is “Two or more persons registered with the authority for Tax purposes as a single taxable person by the provisions of this Decree-Law.”

Why must you De-register a Tax Group?

There are circumstances that might render tax groups to deregister their group. This means that they annual their tax group status, making each member an entity of their own. The reasons are mentioned below-

  • The necessities to be qualified as a tax group are no longer met
  • Members are no longer linked with each other in financial, economic, and supervisory practices. Aside from that, members should also have control over each other or have any stocks in each entity that provides them with the right to vote in the process of decision-making
  • A tax group is understood by the FTA with their reasons, to be ineligible to remain as a tax group
  • A tax group is thought to by the FTA with their reason to be linked to tax scams that would put the nation’s reliability with its tax system at jeopardy if they continue to remain as a tax group, quoting possible tax evasions and other criminal activities in the area of tax

Scenarios for Amending a Tax Group

If the federal authority has reason to believe that the tax group is involved in tax evasions or non-compliance, the FTA can deregister a tax group. The scenarios are mentioned as under-

  1. A person should be removed from the tax group if the person no longer meets requirements for registering as a tax group
  2. A person can be added to a tax group where it can be shown to the FTA that the person’s activities should be regarded as part of the business carried out by the tax group

3 Steps Involved in De-Registering a Tax Group

The procedure of de-registering or amending a tax group is simple and straight-forward. The steps are mentioned as under-

  1. A representative of the tax group should go to the Federal Tax Authority to inform them about the situation within 20 days of finding out that an adherent of a tax group is no longer competent to be a part of it
  2. A notice will be sent to the said representative if a choice is made by the Federal Tax Authority on whether to de-register or amend their group. Along with that data is the date of its effectivity. This will happen within ten business days when a decision is made.
  3. A new Tax Registration Number (TRN) will be provided to the group when they’re amended, and the TRN that was initially assigned to the member that left the group will be rebooted for the member to use as a VAT registered in UAE sole entity.

Hence, persons listed as tax groups under VAT should note the above scenarios where it is essential to de-register or amend the tax group. The procedure to be followed for de-registering or changing a tax group is similar to the process for de-registering an individual registration.

If you are looking for assistance in amending or deregistering your tax group, we can help you with it. Our team at JAXA will ensure smooth deregistration process with creating any hassles. Contact us today to know more.