The Federal tax Authority issues a clarification on the status of sole business and one-man company ownership structures and their VAT obligations. Image Credit: Gulf News

Dubai: Anyone owning multiple 'sole businesses' in the UAE need only one tax registration for all of them, according to the Federal Tax Authority.

They will not need to register for each business separately. It also means that all tax claims must be filed collectively by the individual and for the establishments he owns.

A “sole establishment” (also referred to as sole proprietorship) is 100 per cent owned by an individual, and does not have legal standing independent of its owner.

Tax obligations for sole business owners
The tax claims filed by the business owner in addition to his sole establishments must be considered collectively to determine whether the person exceeded the mandatory VAT registration threshold of Dh375,000.

Any registrant must inform the FTA of any undeclared output tax by submitting a voluntary disclosure in accordance with Federal Law No. 7 of 2017 on Tax Procedures. This includes instances where a person failed to register for VAT on the basis that the mandatory VAT registration threshold was not exceeded on a standalone basis by the individual or his sole establishments.

The individual must notify the Authority if there was a failure to register for VAT and take the necessary corrective action to account for any outstanding VAT.

This, however, will not apply to a one-person operated ‘limited liability company’ or other similar legal entities. These will continue to be seen as “distinct and separate legal” entities from their owners.

“For the avoidance of doubt, it should be noted that a company cannot own a sole establishment,” the FTA said in a statement.