Tax or VAT Grouping indicates grouping of two or more companies or limited liability partnerships as a single taxable entity for VAT purposes in accordance with the provisions of Federal Decree-Law Number 8 of 2017. Entities registered with the authority as a VAT are treated as a single company, which is still under the terms and conditions stated in the law. It is mandatory to fulfil certain conditions to abide by Federal Decree-Law Number 8 of 2017. If you are in a dilemma whether to merge or not for VAT benefits, seeking legal advice and support from a tax consultant is a wise move.
VAT groups are formed to enjoy benefits such as only one VAT return per quarter with reduced administrative work, VAT-free inter-company transactions, simplified accounting & record-keeping process, low-risk challenge of transfer pricing, intra-group charges-related positives, lower chances of incurring penalties in regards to intra-group charges, easier system configuration and implementation, relatively cheaper consultancy or compliance cost.