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A significant update from the Federal Tax Authority (FTA) simplifies the process for businesses wishing to change their 𝐥𝐞𝐠𝐚𝐥 𝐞𝐧𝐭𝐢𝐭𝐲 𝐭𝐲𝐩𝐞. With this new amendment, companies can now transition their legal structure such as shifting from a 𝐬𝐨𝐥𝐞 𝐩𝐫𝐨𝐩𝐫𝐢𝐞𝐭𝐨𝐫𝐬𝐡𝐢𝐩 to an 𝐋𝐋𝐂 without the cumbersome steps of deregistration and re-registration.
𝐄𝐥𝐢𝐠𝐢𝐛𝐢𝐥𝐢𝐭𝐲 𝐂𝐫𝐢𝐭𝐞𝐫𝐢𝐚:
Taxpayers can apply to change their entity type under specific conditions, including changes in business operations, incorrect registration under the wrong entity type, or other valid reasons (with additional details required). Note that this change is permitted only once.
This enhancement is designed to facilitate business restructuring, making the process more straightforward and less time-intensive. If you are contemplating this change, consider the following crucial areas:
- 𝐓𝐚𝐱 𝐂𝐨𝐦𝐩𝐥𝐢𝐚𝐧𝐜𝐞: Evaluate how the change in entity type will influence your VAT and corporate tax obligations to ensure ongoing compliance with FTA regulations.
- 𝐑𝐞𝐠𝐮𝐥𝐚𝐭𝐨𝐫𝐲 𝐀𝐥𝐢𝐠𝐧𝐦𝐞𝐧𝐭: Confirm that the new entity type satisfies all FTA requirements and adhere to relevant filing deadlines.
- 𝐎𝐩𝐞𝐫𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐈𝐦𝐩𝐚𝐜𝐭: Review any necessary updates to trade licenses, invoicing, and customer contracts that may arise from the change in legal status.
In conclusion, this is a strategic opportunity for businesses to enhance operational efficiency and adapt to evolving needs. By carefully planning and ensuring compliance, companies can achieve a seamless transition that supports their growth and stability in the market.
Disclaimer: Content posted is for informational and knowledge sharing purposes only, and is not intended to be a substitute for professional advice related to tax, finance or accounting. The view/interpretation of the publisher is based on the available Law, guidelines and information. Each reader should take due professional care before you act after reading the contents of that article/post. No warranty whatsoever is made that any of the articles are accurate and is not intended to provide, and should not be relied on for tax or accounting advice.
Contributor
Priyanka Garg is a Strategic Tax Director with 10+ years of expertise, excels in comprehensive tax advisory services, specializing in GCC VAT and Excise Tax. Rising from Assistant Manager to Associate Director at MBG Corporate Services UAE, Priyanka leads indirect tax services for GCC businesses, implementing VAT and Excise Tax successfully in UAE and India across diverse sectors. With a Bachelor of Commerce in Taxation and a Chartered Accountant qualification, she fosters collaborative team cultures and delivers high-quality tax solutions, empowering businesses to achieve financial objectives. #TaxLeadership #FinancialExpertise
