The UAE tax authority may soon allow companies to keep their VAT number even after changing their business type. This change could remove delays, reduce costs, and help more businesses grow without tax confusion.
Right now, businesses converting from sole owners or branches to new companies must cancel their VAT and apply again — even if their license stays the same.
Key Facts
- Problem: Entity changes require new VAT registration.
- Result: Delays, penalties, and VAT refund issues.
- Update: Emaratax now allows entity type updates for tax records.
- What’s Missing: No way yet to keep the same VAT number during conversion.
VAT Trouble for Businesses That Reorganize
When companies change from one legal type to another — like turning a sole trader into a private company — most systems allow a smooth switch:
- Banks: Keep the same accounts.
- Licensing authority: Keeps the same license number and date.
- Customs: Uses the same import code.
But VAT rules require a new registration. This breaks the flow of business. It causes:
- Loss of VAT credit.
- Delay in VAT refunds.
- Import VAT linked to the old account.
- Risk of fines for late applications.
Even if the business is the same, the law sees it as a new taxpayer.
Why This Matters for UAE Companies?
This affects many types of businesses:
- Investors: Want a clean VAT record before funding.
- Finance teams: Need to avoid delays and fines.
- SMEs: Often struggle to manage new registration steps.
A system where businesses can keep the same VAT number when they change their structure would:
- Reduce paperwork.
- Lower tax risks.
- Help companies focus on growth.
UAE companies are growing fast. Many are changing their legal shape to attract investors and follow new rules. But VAT laws haven’t kept up.
A change that allows the same VAT number during a conversion would make business smoother and safer.
