October 15 2020

VAT registration of ‘Sole Establishments’

Source: Federal Tax Authority Clarification; IBFD Tax Research Platform

On the 14th of October, the UAE Federal Tax Authority (FTA) clarified that 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 VAT registration 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.

The value of supplies made by the natural person and all its sole establishments must be aggregated to assess whether the VAT registration threshold has been exceeded.

The FTA further details that it will review such VAT registrations in certain cases and inform the relevant taxable persons of the corrective steps they should take, 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.

VAT registration of Sole Establishments