VAT Public Clarification on VAT registration of ‘Sole Establishments’(VATP021)

The UAE Federal Tax Authority (FTA) has issued public clarification in respect of VAT registration obligations of a natural person in respect of its sole establishments.

Meaning of Sole Establishment/Sole Proprietorship

  • A legal form of business;
  • 100% owned by a natural person;
  • Does not have a legal personality that is independent of its owner and is accordingly considered to be the same person as its owner;
  • Does not include 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);
  • Cannot be owned by a legal person (e.g. a company).

VAT registration obligations of Sole Establishments

A natural person is required to include all its sole establishments under one VAT registration.

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.

Review of previous VAT registrations of sole establishments:

The FTA will review cases where a natural person may have received separate VAT registrations for different sole establishments.

Thereafter, FTA will inform the relevant taxable persons of the corrective steps they are required to take, if any.

Accordingly, for any VAT registrations received in the past, no action is required to amend the VAT registrations, until specifically directed by the FTA.

Future VAT registration application of sole establishments:

In respect of all future VAT registration applications, the applicants must conform to the position stated in this Public Clarification.

Contacts

You may email us or can contact any of our team members relating to your queries on this subject:

Stany Pereira
Managing Partner
stany@pkfuae.com

Sarika Dhameja
Director – Tax Services
sdhameja@pkfuae.com

Mradul Gupta
Manager
mgupta@pkfuae.com

Rahul Shah
Assistant Manager – Tax
rshah@pkfuae.com

Disclaimer:
This document has been prepared as a general guide. It is not substitute for professional advice. Neither PKF UAE nor its partners or employees accept any responsibility for loss or damage incurred as a result of acting or refraining from acting upon anything contained in or omitted from this document. PKFUAE is a member firm of the PKF International Ltd family of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member or correspondent firm or firms.