UPDATING YOUR VAT STATUS – LEGAL TYPE CHANGE ON THE FTA PORTAL

The Federal Tax Authority's (FTA) recent VAT amendment is a major benefit for tax registrants in the UAE. Businesses can now change their entity's legal type directly through the Emara Tax portal, eliminating the need for deregistration and re-registration. This update streamlines the process, saving both time and effort by removing the previously complicated and lengthy steps.

Previous Challenges: Time Consuming & Delays

Prior to the amendment, businesses registered under the wrong legal type had to go through deregistration and re-registration to correct it. This process resulted in a new Tax Registration Number (TRN), requiring updates to invoices and accounting systems. The time-consuming nature of this process often led to business disruptions and potential penalties for non-compliance.

New Amendment: Simplified Legal Type Change and Required Documents

The Federal Tax Authority (FTA) has introduced a new option for businesses to amend the legal type of their entity directly through the Emara Tax portal, eliminating the need for deregistration and re-registration. This new feature is a time-saving solution for businesses that were initially registered under the wrong legal type, making the correction process much more straightforward and efficient.

Required Documents for Legal Type Change:

Proof of entity type change

For entities changing to a "Natural Person":

• Emirates ID or Passport of the taxable person

• Trade license

For entities changing to a "Legal Person or Partnership":

• Certificate of incorporation

• Trade license

• Emirates IDs, Passports, and Trade licenses of the owners/partners

When Immediate Action is Needed:

If your entity was registered with the incorrect legal type in the Emara Tax portal, it is important to take immediate action. The FTA’s recent VAT amendment allows businesses to correct this mistake without going through a lengthy process, provided the wrong legal type was selected during the initial registration.

Exceptions to the New Amendment:

However, it’s important to note that this amendment does not apply to formal legal structure changes. For example, if your business has transitioned from a Sole Establishment to an LLC, or any other such legal type transformation, the new process won’t apply. In such cases, you will still need to deregister the old entity and re-register the new one under the correct legal type, as a change in the fundamental legal structure requires a new VAT registration and a new Tax Registration Number (TRN).

At ALWAHAT, we simplify the process of updating your VAT status for legal type changes. Our expert team will guide you through the necessary steps, ensuring that all required documents are prepared and submitted correctly. We handle the complexities of the Emara Tax portal, saving you time and preventing potential compliance issues. Whether you need to amend your registration or undergo a full re-registration due to a legal structure change, we’re here to make the process seamless and hassle-free.