How can a Member be Removed from a Tax Group?
As you know the tax system is one of the strongest assets of the UAE Federal Government, it was implemented to improve the standard of living and services. The VAT group registration is when two or more persons conducting businesses may apply for a single taxable person as a tax group. A company can get VAT registration as a VAT tax group under common ownership and control. One member of the tax group is considered as a representative of the tax group. The VAT returns and VAT payments are administered by the member who acts as a representative of this VAT group. However, all the members of the group are jointly responsible for the payments and returns. The group members can make supply within the group. If any of the members are no longer eligible for tax grouping, then the representative member must inform the FTA within 20 days of the change in eligibility. There’s no need for VAT accounting for these particular supplies.
VAT Group Registration
- To be eligible for applying for VAT group registration, all of the subsequent conditions got to be fulfilled:
- Tax group members shall have a place of establishment or fixed establishment in the state where regular business and sufficient degree of human and technology resources for the supply.
- The VAT group is treated more or less as one taxable person.
- The group VAT license number is issued within the name of the representative member.
- The VAT group uses one consolidated accounting and all members are equally liable for VAT debt and defaults.
- The representative member is susceptible to submit consolidated VAT payment and VAT returns on behalf of the VAT tax group.
Advantages of Vat Group Registration
- All the entities within a VAT group are going to be treated as 'ONE' entity for VAT purposes. This helps the companies under the VAT group in simplifying accounting for VAT, and also compliance reporting.
- Any supplies within the entities of a tax group are out of the scope of the VAT. This suggests VAT won't be levied on the supplies between the entities of a VAT Group. However, supplies made by the VAT group to an external entity which is outside the VAT groups are subject to VAT.
Amendment and circumstance under which a tax group member is removed
Once you’re registered as a VAT group, the subsequent changes which can be made are:
- Add additional members to an existing group
- Remove members from an existing group
- Change the representative member
- Disband the group
Removal of a tax group member under the following situations
1. If the business stops making taxable supplies and is under liquidation stage.
2. If the ownership of any tax group member changes.
3. If the registered business no longer meets the requirement to be considered as a group.
4. If the companies in the group are no more financially associated with the group.
5. If it foreknows the tax status as a group can result in any sort of tax evasion.
There are two scenarios in which removal from the tax group takes place
Removal of a member from tax group
- The representative of the tax group should inform FTA with regard to the situation under which the member is removed.
- Within 20 business days, the amendment notification will be filled with FTA.
- The representative member will receive a notification from FTA whether to de-register for vat UAE or amend their group.
- Along with that information is the date of its effectiveness.
- Within 10 business days when a decision is made.
- A new TRN will be given to the group when they’re amended, and the TRN has given to the member that left the group will be reactivated.
Removal of a representative member from tax group
In this case, the representative member is removed, the exact reason for the removal should be updated following the below steps:
- Access the web portal of FTA, select ‘change representative member’
- Duly fill the tax group amendment application
- Submit change representative request with the application to FTA
- Once the request is submitted the approval message will be received from FTA
VAT Deregistration is a web procedure through FTA portal. The companies which are closed must have the liquidation letter from the authorities so as to use for VAT Deregistration. The companies which are making taxable supplies within the last 12 months since the registration is below the edge then they need to have a budget signed and stamped for the last 12 months showing that the business isn't ready to make taxable supplies above the edge. If the companies or individuals don’t apply for VAT Deregistration within the advised time as per the FTA law, then they are going to get a penalty and after paying the fines and penalties, the authorities will approve their VAT De-Registration. After applying for the VAT Deregistration, FTA will review the appliance and if they confirm the VAT De-registration the status changed to ‘Pre-Approved’. Then the companies need to submit a final VAT Return Filing after the last VAT Return filing the companies must clear all the outstanding liabilities so as to finish the VAT Deregistration process.
Failure to submit the de-registration application within the period impose the administrative penalty of AED 10,000 as stipulated in the Cabinet Resolution No. 40 of 2017
CDA provides the expert services of VAT Deregistration in compliance with the VAT laws. CDA analyses the reasons and makes the deregistration process easy for you. We identify the importance and need for VAT services for every business entity in the UAE, and deliver a wide range of VAT services, which include:
- VAT training
- VAT registration
- VAT deregistration
- VAT compliance and control
- VAT filing and payment
- Vat impact on company cash flow, etc.
Other than the VAT related services, CDA provides various business services that include CFO Services, Auditing Services, Accounting & Bookkeeping Services, Accounting Software services and Payroll Services.