With respect to sale or transfer of business asset as a going concern, FTA has issues a clarification on 20th August, 2019 vide Clarification No: VATP015. As per the UAE VAT law, if a business is transferred or sold and is continued to be run by the purchaser and he is registered under VAT law, then this case is considered as transfer as going concern. No VAT will be charged on the same as this supply is out of scope of UAE VAT Law .

Conditions to be satisfied for transfer of business as a going concern:
(1) Transfer must be of whole of independent part of the business.
(2) The purchaser/recipient should be a taxable person in Dubai, UAE.
(3) The purchaser/recipient will continue the business which was purchased or received by him.

Few Clarifications:
(1) Sale of shares of company doesn’t amount to sale of assets/ transfer of business. In sale of shares only the owner of company gets changed, and the company is nowhere involved in the transaction.
(2) The transferred business should be in working condition.
(3) If the purchaser/recipient is not already registered under VAT, then he must have applied for VAT registration number on the date of transfer.
(4) The business must be continued by the purchaser/recipient in the exact same manner. This point can be overlooked, as long as he has genuine interest in running the business.
(5) Sale of only an asset will attract VAT. However, if a person sells a machinery along with the factory working space and this can be run independently, then this is exempt under the UAE VAT Law.

Hence, sale or transfer of business completely or an independent part as a going concern is exempt under the UAE VAT Regime.

For more information on this topic, please visit our Insights Section or Contact Us.

For enquiries Phone (UAE): +971 567952590

Related Articles:

1.     Top FTA VAT Return Filing Services in Dubai Abu Dhabi UAE

2.     List of VAT Consultants in Dubai, UAE

3.     When will UAE implement Corporate Tax?

4.     UAE Guide: VAT Return Filing Services in Dubai, Abu Dhabi, UAE

5.     UAE Guide: VAT Fines Services in Dubai, Abu Dhabi, UAE

6.     UAE Guide: How to Appeal Vat Penalties in Dubai, Abu Dhabi, and UAE?

7.     UAE Guide: VAT Consultant in Abu Dhabi

8.     UAE Guide: Top VAT Consultant in Dubai (2023)

9.    UAE Guide: Role, Responsibilities, Eligibility and Skills of VAT Consultant

10.  UAE Guide: Which Documents are Required to Register for VAT Return?

11.  UAE Guide: VAT Registration

12.  UAE Guide: Implications of VAT

13.  UAE Guide: An Introduction to VAT

14.  UAE Guide: VAT Return Form 201- Everything you must know

15.  UAE Guide: Why do we Need A VAT Consultant in the Dubai?

16.  UAE Guide: What is the Need to Approach an Experienced Business Setup and VAT Consultant in Dubai?

17.  UAE Guide: What are the Advantages of Hiring a VAT consultant in Dubai Abu Dhabi?

18.  UAE Guide: VAT Penalties in Dubai

19.  UAE Guide: What is Article wise analysis of VAT Law for Dubai and Abu Dhabi?

20.  UAE Guide: What is VAT Audit in Dubai?

21.  UAE Guide: Dubai VAT an Aid to Business Growth

22.  UAE Guide: Why is Input VAT Non-recoverable on Entertainment Services in Dubai?

23.  UAE Guide: What are ways to avoid Penalties in Dubai VAT Law?

24.  UAE Guide: What is VAT on reimbursement and disbursement of expenses in Dubai?

25.  UAE Guide: What is VAT on compensation Payments in Dubai and Abu Dhabi?

26.  UAE Guide: What is VAT on digital Marketing Services in Dubai?

27.  UAE Guide: What is VAT on transportation in Dubai and Abu Dhabi?

28.  UAE Guide: How to apply for Excise Tax De-Registration in Dubai?

29.  UAE Guide: What is VAT on Options in Dubai and Abu Dhabi?

UAE Guide: What are VAT Groups in Dubai?

VAT Penalties in Dubai

Dubai VAT: AN Aid to Business Growth

How does VAT Regime work in Dubai?

What is Exports and Imports under VAT in Dubai?

How to Amend VAT Details in Dubai and Abu Dhabi?