Two or more Persons registered with the Authority for Tax purposes as a single taxable person in accordance with the provisions of this Decree Law’ defines in Article 1 of UAE VAT Law. Two or more persons conducting Businesses may apply for Tax Registration as a Tax Group if all of the following conditions are met:
  • Each shall have a place of establishment or fixed establishment in the State.
  • The relevant persons shall be related parties.
    • Related Parties are two or more people who are not separate on the economic, financial, or regulatory level, where one can control the others either by law or through the acquisition of shares or voting rights.
    • Two or more Person shall be considered Related Parties if they are associated in economic, financial, and regulatory outlook, taking into account the following:
  1. Economic practices, which shall include at least one of the following:
    • Achieving a common commercial objective.
    • One Person’s Business benefiting another Person’s Business.
    • Supplying of Goods or Services by different Businesses to the same customers.
  2. Financial practices, which shall include at least one of the following:
    • Financial support is given by one Person’s Business to another Person’s Business.
    • For being financially viable, the dependency on another Person’s Business is a must.
    • Common financial interest in the proceeds.
  1. Regulatory practices, which shall include at least one of the following:
    • Common management.
    • Common employees whether or not jointly employed.
    • Common shareholders or economic ownership.
Benefits of VAT Grouping in the UAE The group is considered as a single entity for VAT purposes, since the process is simplified, the costs that may be incurred on multiple levels can be reduced. The following are the other major benefits,
  • Being able to submit a consolidated VAT return.
  • A representative member can pay any VAT levied on the imports of goods made by any other member.
  • There is a provision to amend the members of the group or change the controller.

Source: Federal Tax Authority