Is vat registration required for foreign and local company branches?
As per the UAE VAT Decree-law Art. (13), “Every Person, who has a Place of Residence in the State or an Implementing State and is not already registered for Tax, shall register in the following situations:
- Where the total value of all supplies is referred to in Art. (19) exceeded the Mandatory Registration Threshold over the previous 12-month period; and
- Where it is anticipated that the total value of all supplies is referred to in Art. (19) will exceed the Mandatory Registration Threshold in the next thirty (30) days.”
When a local company have branches in UAE, the branches are seen as an extension of the main company. Therefore, the branches are not required to be registered separately for VAT purposes. It will automatically fall under the same VAT registration of the main company.
On the other hand, when a foreign company has branches in UAE, it conducts business inside the state, and the branches are registered under Federal Law (2) of 2015 concerning commercial companies and have a separate commercial license. Then the branches themselves are deemed to be separate legal entities. in which the branches have a place of residence in the state, and as per the Art. (13) of UAE VAT Decree-law, the foreign company branches are required to be registered for VAT purposes separately and could form a tax group as per Art. (14) of the UAE VAT Decree-law, if the tax group conditions are met.