May 14

Why the FTA Might Reject Your VAT Tax Group Application in the UAE

📣 Introduction

You meet the criteria. Same ownership, UAE presence, shared teams. So why would the FTA reject your VAT tax group application? Here’s the part most businesses miss: anti-avoidance provisions. Let’s break down what the law says, and why your well-structured group could still face a red flag.

⚖️ Law Reference: VATGGR101, Section 2.5 (Anti-Avoidance)

1. FTA May Refuse VAT Grouping If:
  • Group would reduce tax payable without economic substance
  • Intra-group transactions are one-sided
  • There’s a risk of evasion or audit complexity

❌ Example:

  • FutureX Systems LLC and FutureX Consulting FZCO both 100% owned by Mr. Omar
  • FutureX Consulting only invoices its sister company
  • No 3rd-party sales, no market exposure

🚨 FTA sees this as a revenue shelter → application may be rejected


✅ How to Strengthen Your VAT Group Application

  • Show proof of 3rd-party clients or invoices
  • Justify VAT group as an operational simplification, not a tax loophole
  • Submit business process flows, contracts, and shared service models

🌟 Key Takeaways

  • Even eligible companies can be rejected
  • VAT grouping is not a loophole — FTA looks for substance
  • Audit-ready documentation builds trust

✉️ How Fastlane Can Help

We help you:

  • Draft strong FTA-ready VAT tax group applications
  • Identify anti-avoidance risks before applying
  • Submit supporting documentation with your registration

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