Entity Type Changes for UAE Businesses – A Streamlined Process

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The UAE's FTA has rolled out a major update to its EmaraTax portal, enabling businesses to change their entity type without going through the traditional process of de-registration and re-registration. This change is expected to enhance the operational efficiency, simplify tax compliance, and reduce administrative burden for businesses. 

The Change

Prior to this update, businesses in the UAE had to go through a cumbersome process to change their entity type. The procedure involved deregistering the old entity, registering the new one, and facing potential tax compliance disruptions during the transition. This process not only caused operational delays but also increased administrative costs, especially for businesses undergoing regular structural changes.

The new system introduced by the FTA allows taxable persons to switch entity types directly within the EmaraTax portal, bypassing the need for de-registration. This ensures that businesses can maintain uninterrupted tax compliance while making the switch, thus minimizing the risk of tax non-compliance and tax costs. It also prevents the creation of new tax registration numbers (TRNs), which can lead to confusion in corporate tax filings and VAT group registrations.

The Process

Switching entity types on the EmaraTax portal is now a straightforward process. Businesses must follow these two key steps:

2. Businesses must upload supporting documentation to justify the entity type change. These documents might include revised legal agreements, resolutions, or other formal records that indicate the shift in the entity’s legal status. The FTA will review these materials, and once approved, the entity type will be updated without further action required.

Conclusion

This facility offered by the Emaara tax portal is indeed a welcome step.  For businesses that have converting from one form of entity to another, this update significantly simplifies a complex process. Further, it also help them rectify any errors or inconsistencies in legal entity type. 

The ability to amend these details without disrupting business operations is a welcome relief for many businesses.

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