The Federal Tax Authority, UAE has released a new public clarification addressing the VAT registration of "Sole Establishments'. A Sole Establishment refers to sole proprietorship business form which is 100% owned by a natural person and does not have a legal personality that is distinct from its owner. The important points to be noted in the clarication are:
1. As per Law since each person can only obtain one VAT registration, the natural person should include all of his sole establishments under one VAT registration. The sole establishments are not eligible to get registered separately;
2. VAT registration should be sought in the name of the natural person. However if the person wishes to use the name of one of its sole establishments, the FTA will consider the request;
3. While evaluating the registration threshold, the natural person must consider taxable supplies made by the person and the value of supplies made by all sole establishments under his name collectively. If the collective value exceeds the registration limit, the person has the obligation to get registered ;
4. If any sole establishment(s) have already obtained separate TRN in the past, the FTA will review such registrations in certain cases and will notify the registrants on the corrective steps to be made on their registrations. No action need be taken for amending the existing registrations untill specifically directed by the FTA ;
5. All future registration applications of Sole Establishments should adhere to this public clarification ie they should be collectively registered under the name of the owner itself ;
6. The above clarification does not apply to one person company LLC or other similiar legal entities which are seen as distinct and separate legal persons from their owners.
Disclaimer: The content posted is for informational purposes only and is a personal view/interpretation of the publisher based on the available Law, guidelines and information. This should not be considered a definitive answer/advice that one should adopt. Each reader must take due professional care and should seek clarification/advice from the Tax authority itself to determine their Tax implications and the content posted is not intended to indemnify the reader if they choose to apply the view/interpretation posted.