VAT registration of ‘Sole Establishments’
Issue
A natural or legal person may own a number of sole establishments. There has been uncertainty on whether each sole establishment needs to obtain a separate VAT registration or whether all such establishments should be included under one VAT registration.
This Public Clarification clarifies the VAT registration obligations of a person in respect of its sole establishments. Note that the term “person” refers to a natural or legal person.
Summary
A person owning a number of sole establishments should obtain only one VAT registration for all its sole establishments, and it is not permissible to register each sole establishment separately for VAT.
The Federal Tax Authority (‘FTA’) will review, in certain cases, the VAT registrations by taxable persons in respect of sole establishments and will inform them of the corrective steps to be taken, if any.
Detailed discussion
Meaning of Sole Establishment
A sole establishment (also referred to as sole proprietorship) is a form of business which is 100% owned by a 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. It should be noted that, for VAT purposes, a One-Person Company LLC or other similar entities are not considered sole establishments, and are seen as a distinct and separate legal person from their owner (unless the relevant applicable legislation state otherwise).
VATP026 – Sole Establishments – Legal and Natural – 05 05 2021 Download the complete