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This Public Clarification clarifies the VAT registration obligations of a natural person in respect of its sole establishments.
A natural person owning a number of sole establishments needs to obtain only one VAT registration for all its sole establishments and does not require separate VAT registrations for such establishments.
The Federal Tax Authority (‘FTA’) will review, in certain cases, the VAT registrations by taxable persons in respect of sole establishments and will inform them of the corrective steps to be taken, if any.
A sole establishment (also referred to as sole proprietorship (is a legal form of business which is 100% owned by a natural person. A sole establishment does not have a legal personality that is independent of its owner and is accordingly considered to be the same person as its owner. It should be noted that this Public Clarification does not apply to a One-Person Company LLC or other similar legal entities, which are seen as distinct and separate legal persons from their owners(unless the applicable legislation treats such entity and the natural person as the same person) For the avoidance of doubt, it should be noted that a legal person (e.g a company) cannot own a sole establishment.
A natural person may own a number of sole establishments, which may perhaps undertake different lines of business.
On the basis that a sole establishment does not have a legal personality that is independent or different from its owner, and that each person can obtain only one VAT registration, it is hereby clarified that a natural person should include all its sole establishments under one VAT registration. Therefore, separate VAT registrations should not be sought for the different sole establishments of the same owner.
The VAT registration in such cases should be obtained ideally in the name of the natural person that owns the sole establishments. However, if a natural person, owning multiple sole establishments, wishes to obtain the VAT registration in the name of one of its sole establishments, the person may apply to the FTA
accordingly.
It is important to note that the taxable supplies by a natural person, as well as his sole establishment,
must be considered collectively in order to determine the VAT registration obligations.
Our experts will conduct a preliminary check on your business on the applicability of VAT as per the FTA Guidelies.
For Assessment on VAT and TAX in the UAE
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