VAT group registration in the UAE: who can form one and what changes

A VAT group lets two or more related UAE businesses register as a single taxable person with one tax registration number and one return. Supplies between members are generally ignored for VAT. Members must be legal persons established in the UAE and under common control, and each member is jointly liable for the group's VAT.

What a VAT group is

Under the UAE VAT law, related legal persons can ask the FTA to treat them as one taxable person. The group gets one tax registration number and files one return through a representative member. Transactions between members are generally outside the charge to VAT, which removes the cash-flow cost and paperwork of invoicing each other. The FTA has discretion to approve, refuse or end a group. Check the VAT Decree-Law, Cabinet Decision No. 52 of 2017 and the FTA's VAT group guide for the current conditions.

Conditions to qualify

• Each member is a legal person. Individuals and sole establishments cannot join.
• Each member has a place of establishment or fixed establishment in the UAE. Overseas companies and non-resident branches are not eligible.
• The members are related parties, meaning they are under common ownership or control. Advisory sources describe the test as a controlling interest of at least or more than 50%; confirm the exact wording in the law.
• The group meets the registration requirement. Sources differ on whether the test applies to the group's combined taxable supplies or to one member; check the FTA's guide.

How it works in practice

You apply through EmaraTax with evidence of control, such as the shareholder registers and an ownership chart. One member is nominated as the representative and files the group return. Each member's own VAT registration is cancelled when the group is formed, and the group takes a single TRN. Each member remains in the group for as long as the FTA allows and the conditions hold.

Benefits

Risks and costs

• Joint and several liability. Every member can be liable for the group's total VAT, penalties included.
• Partial exemption. If one member makes exempt supplies, the group's recovery may fall. Model it first.
• Admin. One representative must collect data from every member by the deadline.
• Exit. Leaving or ending a group requires an application, and member changes during the year must be reported.

When grouping is worth it

Groups gain most when members trade heavily with each other and recover all their input VAT anyway, so internal charges would just be paperwork. It gains little where each business has a different tax period or where one member has a poor compliance record. Look at the numbers for your group before applying. Our VAT services team can run that model with you.

Read next

If you are registering for the first time, see the registration threshold and documents for VAT registration. For a group with corporate tax, the rules differ; see corporate tax groups.

A worked example

Two companies under common ownership trade with each other. Company A sells services worth AED 400,000 to Company B each year and Company B resells them to customers. Registered separately, A charges AED 20,000 of output VAT to B, and B recovers the same AED 20,000 as input tax. The cash moves between them but the net effect is nil, and both must issue invoices, record the tax and file returns. In a VAT group the AED 400,000 supply is generally ignored, so the invoices, postings and the temporary cash tie-up disappear. If B were unable to recover all its input VAT, for example because it makes exempt supplies, grouping could change the result, so test the numbers.

Partial exemption in a group

When a group combines taxable and exempt businesses, input tax recovery is computed for the group as a whole. A member that makes mostly exempt supplies can lower the group's recovery rate. Run a recovery calculation with and without the exempt member before deciding who should join. See blocked input VAT and zero-rated, exempt and out of scope.

Joining, leaving and changes during the year

Adding a member, removing one or changing the representative member all require notifications to the FTA. A member that leaves registers separately if it meets the threshold, and the group's position at the exit date needs a clean cut-off. Merge or acquisition events can force a change, so build VAT into deal timelines. Keep the board approvals and the control evidence on file for each change.

Running a group return

• Appoint one person at the representative member to collect data from every member.
• Agree an internal deadline several days before the FTA deadline.
• Use the same chart of accounts and VAT codes across members.
• Reconcile intragroup balances before the return is prepared.
• Keep each member's records, since each can still be asked for its own evidence.

For return mechanics, see VAT return due dates and VAT return filing.

Foreign-owned groups

A foreign parent with several UAE subsidiaries can group the UAE subsidiaries, but not the parent unless it also has a UAE establishment. The parent's own VAT position stays separate. Branches of foreign companies cannot join, even if they are registered in the UAE. Check the structure chart before you plan the group.

Timing the application

Apply early enough that the group is approved before the start of a tax period you want it to cover. Check the FTA guidance on effective dates and the treatment of the members' previous returns. Closing out the members' individual registrations and filing their final returns is part of the process.

Governance within the group

• A written group VAT policy, approved by the board.
• Clear data submission deadlines for each member.
• Training for finance teams on the group return.
• An escalation route for disputed treatments.

Frequently asked questions