UAE Pillar Two Top-up Tax Registration is Now Open on EmaraTax Portal

Insights

June 1, 2026

The UAE Federal Tax Authority (FTA) has officially enabled the Pillar Two Top-up Tax Registration on the EmaraTax portal. This represents a significant compliance requirement for Multinational Enterprise (MNE) groups operating in the UAE.

Under the new Domestic Minimum Top-up Tax (DMTT) framework—effective for financial years starting on or after January 1, 2025 in-scope MNEs with global consolidated revenues of €750 million or more are required to maintain a minimum effective tax rate of 15% on their UAE profits.

With the first active reporting cycle taking place in 2026, eligible entities must begin the registration process. The EmaraTax portal currently offers two pathways for registration:

Domestic Designated Filing Entity (DDFE) Registration: A single constituent entity is appointed to register and file centrally on behalf of the entire UAE domestic group. While this approach centralizes reporting, it requires preliminary steps, including mapping out domestic group entities and securing the necessary internal authorizations.

Individual Entity Registration: In cases where a central filing body is not appointed, individual constituent entities or joint ventures can register directly to manage their compliance independently

Required Information for Registration

Before proceeding with the formal EmaraTax registration, applicants are required to complete an initial profiling questionnaire. Your organization should have the following information prepared:

The selected registration strategy (DDFE versus Individual Entity).
Confirmation of group eligibility based on the €750 million global revenue threshold.
Details regarding whether the Pillar Two requirements apply due to recent structural changes, such as a merger, acquisition, or demerger.
The precise group classification for registration and reporting purposes.

Recommended Next Steps

Multinational groups with operations in the UAE should proactively assess their Pillar Two readiness by determining the most appropriate filing approach, aligning compliance responsibilities across relevant entities, and evaluating the impact on their existing structures.

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May 12, 2026

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UAE E-Invoicing Accredited Service Provider (ASP) Deadline Extended To 30 October 2026

Insights

May 12, 2026

The UAE Ministry of Finance has announced targeted amendments to the UAE E-invoicing framework, including an extension of the deadline for appointing an Accredited Service Provider (ASP).

What Has Changed?

Entities subject to the UAE e-invoicing system with annual revenues exceeding AED 50 million will now have until 30 October 2026 to appoint an Accredited Service Provider (ASP), extending the previous deadline of 31 July 2026.

Reason for the Extension

According to the Ministry of Finance, the extension was introduced following,

An Assessment of market readiness

Feedback from businesses requesting broader technical options

The Need to encourage more competitive pricing within the ASP ecosystem

Approved Accredited Service Provider (ASP)

The ministry announced that 32 service providers have been accredited so far, with a large number of service providers in the final stages of the accreditation process, stressing that this step will contribute to building a more integrated and competitive technology system.

Empowering Local Businesses

To support and empower local businesses, the Ministry amended Ministerial Resolution No. (64) of 2025, allowing service providers to offer technical solutions through partnerships with third-party providers. This enables local companies to collaborate with international providers, enhance technical expertise, and deliver solutions that meet UAE requirements, further accelerating the country’s digital transformation.

Key Important Clarification

While the ASP appointment deadline has been extended, the mandatory implementation timeline remains unchanged.

Businesses with annual revenues exceeding AED 50 million must still fully implement the E-Invoicing system by 1st January 2027

Key Takeaway

The extension provides businesses with additional time to evaluate and select suitable Accredited Service Providers while ensuring adequate preparation for compliance ahead of the mandatory go-live deadline on 1 January 2027.

Below is the link to the official announcement issued by the Ministry of Finance.

https://mof.gov.ae/en/news/ministry-of-finance-announces-targeted-amendments-to-einvoicing-system-decisions/

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June 1, 2026

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April 30, 2026

FTA Clarification CTP010: Director vs Officer in UAE Corporate Tax (Article 36 Explained)

April 22, 2026

Amendments to the VAT Guide on Input Tax Apportionment – VATGIT1

March 30, 2026

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Insights

FTA Clarification CTP010: Director vs Officer in UAE Corporate Tax (Article 36 Explained)

Insights

April 30, 2026

The Federal Tax Authority has clarified the meaning of “director” and “officer” for payments to Connected Persons under Article 36 of the Corporate Tax (CT) Law. The interpretation goes beyond job titles and is based on actual authority and decision-making power. The purpose of this clarification is to explain exactly what “director” and “officer” mean beyond the title.

Article 36(1) states that any payment or benefit given by a Taxable Person to a CP is deductible only if:

It matches the Market Value of the service, benefit, or anything else provided by the CP, and
It is incurred wholly and exclusively for the purposes of the company’s business.

A “Connected Person” (CP) under Article 36(2)(b) includes a director or officer of the company. Additionally, under Article 55(1), of the CT law states that the FTA may require the company to disclosure in its CT Return, covering all transactions and arrangements with CPs. Currently, the FTA requires payments or benefits to CPs to be disclosed in the CT return if they exceed AED 500,000.

These rules ensure that payments to directors or officers are:

Deductible only if they do not exceed Market Value, and
Properly disclosed.

Who is a Director as per the public clarification (CTP010)?

A “director” is a person who holds a position on the board of directors. This includes:

Executive directors
Non-executive directors
Temporary directors
Permanent directors
Alternative directors

as long as they are appointed on the board of directors, including any member of a board committee.

If the company does not have a board of directors, then “director” refers to a person holding a position on any equivalent governing body — including but not limited to:

Board of trustees
Board of governors

as determined under the applicable law governing the company’s incorporation, or the company’s constitutional documents, including but not limited to:

Memorandum of association
Articles of association
Partnership deed
Trust deed

Just having the word “director” in a job title does not make someone a director for the purposes of Article 36(2)(b).

If a person’s job title includes “director” but they do not hold a position on the board or equivalent governing body as per the company’s incorporation or constitutional documents, they are not considered a “director”.

However, it is still necessary to check whether that person could be considered an “officer.”

Who is an Officer as per the public clarification (CTP010)?

An “officer” includes any person who meets at least one of the following three criteria:

The person has the authority and responsibility for planning, directing, and controlling the
activities of the Taxable Person, in accordance with the framework of International Accounting
Standard 24 on Related Party Disclosures.
The person has the authority to make strategic decisions related to the financial, operational,
or commercial matters of the Taxable Person.
The person has the authority to enter into agreements or approve actions that legally or
contractually bind the Taxable Person.

Officer does not include a person who does not have the ultimate strategic decision-making or binding authority. An officer may include, but is not limited to:

Chief Executive Officer (CEO)
General Manager (GM)
Chief Financial Officer (CFO)
Chief Operating Officer (COO)
Chief Commercial Officer (CCO)
An authorised representative with discretionary authority

together referred to as “C-suite.”

A formal appointment or job title may be used as an indicator when assessing whether someone is an officer but it should not be relied upon as the sole criterion.

If a person does not have a formal appointment or C-suite job title, but through their actual conduct effectively has:

The authority and responsibility for planning, directing, and controlling, or
The authority to make strategic decisions, or
The authority to take or approve actions that legally or contractually bind the company

that person is still considered an “officer.”

The concept of “officer” applies to all Taxable Persons, including trusts, foundations, and unincorporated partnerships that are treated as fiscally opaque for Corporate Tax purposes.

Only a natural person can be a “director” or “officer” of a Taxable Person.
If a person is considered both a Related Party and a CPs of a Taxable Person, that person will be treated only as a Related Party for Corporate Tax purposes.

Examples

Sl No.	Role	Officer Status (✓/✗)
1	GM of an LLC	✓ – if they have authority and responsibility for overall management of the company
2	Head of a division	✓ – if they make ultimate strategic decisions. ✗ – if they only operate within frameworks set by higher authority
3	Head of HR	✓ – if they have ultimate authority over strategic HR decisions. ✗ – if limited to routine HR functions
4	Employee named on trade icence / board resolutions	✓ – if this gives authority to approve actions that legally or contractually bind the company
5	Holder of Power of Attorney	✓ – if PoA grants discretionary and strategic decision-making authority. ✗ – if limited to predefined tasks
6	Third-party secondees/ outsourced personnel	✓ – if they have authority to make strategic decisions or bind the company ✗ – if only executing pre-agreed terms.
7	GM of a Permanent Establishment	✓ – if responsible for planning, directing, and controlling activities of the PE
8	Interim CEO titled “consultant”	✓ – if they perform CEO role with authority to plan, direct, and control activities
9	GM appointed by natural-person Taxable Person	✓ – if they have authority and responsibility for managing the business
10	Trustee of a trust (Taxable Person)	✓ – if they have authority to plan, direct, and control activities of the trust
11	Court-appointed trustee / administrator	✗ – if only carrying out court-assigned duties without discretionary authority

Key Takeaways

The classification of a “director” or “officer” is determined by substance over form. What matters is the actual authority to plan, direct, and control the business, rather than the title held. Accordingly, individuals who may not formally hold the title of director or officer could still fall within this scope if they exercise significant decision-making powers.

Businesses should therefore carefully assess roles and responsibilities in practice to ensure that payments to CPs are correctly evaluated and remain compliant with the CT Law. Companies should also revisit and clearly identify who qualifies as a director or officer based on their functional roles, and ensure that appropriate benchmarking is undertaken for any payments made to such persons.

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Insights

Amendments to the VAT Guide on Input Tax Apportionment – VATGIT1

Insights

April 22, 2026

The Federal Tax Authority (FTA) in the United Arab Emirates (UAE) has amended Input tax apportionment guide – VATGIT1 on 30^th September, 2025. We have summarised the key highlights below –

Input Tax Apportionment

Input tax apportionment is a process of calculating how much input tax you are allowed to claim back when expenses are partly for taxable supplies and partly for exempt or non-business use.

Specified Recovery Percentage (SRP)

SRP is a new method introduced by FTA, under this method business are allowed to use a fixed recovery rate based on the prior year’s actual recovery rate. A taxable persons can submit an application to the FTA to adopt a fixed recovery percentage this approach helps reduce the effort of recalculating the recovery ratio for every tax period.

Eligibility to apply for SRP:

Applicants must have been registered for VAT for a minimum of 12 months.
Applicants must be making taxable supplies , exempt supply such as financial services and supplies that are made outside the UAE which would have been considered taxable had they been made in the UAE.
Application is made to the FTA by either the authorized signatory, tax agent or by the legal representative.

Requirements for submitting an application for Special Input Tax apportionment to the FTA

Applicants are required to provide the following information as part of the request:

A cover letter that contains:
- Detailed description of the Business activities of the Applicant,
- The special Input Tax apportionment method to be used, and
- The reasons for applying for a special Input Tax apportionment method.
Historical calculations of Residual Input Tax apportionment in Excel format using the standard method of apportionment. The calculations should be for the period of 12 months preceding the application (as applicable or a shorter period if the business has been conducted for less than 12 months)
Calculations of the Residual Input Tax apportionment in Excel format for the same period as above but using the special method requested by the Applicant.
Where an application is submitted for a sectoral method, the Applicant is required to provide the special apportionment method calculations separately for each sector included in the request, along with a clear description of the activities and nature of each sector.
Applicants must ensure that all figures and details included in the calculations are fully aligned and reconciled with the Tax Returns that have been filed with the FTA for the respective Tax Periods.

Response times highlighted

FTA’s standard response times remain unchanged:

40 business days for non-sectoral method requests
60 business days for sectoral method requests

Applicants are required to reply to any queries raised by the FTA within 40 business days.

Validity of Approved SRP

Approval for special input tax apportionment methods is valid for:

4 years for non-sectoral methods
2 years for sectoral methods

Notifying FTA in case of any variance

Registrants must inform the FTA if the actual recovery percentage for the entire tax year differs by more than 10% from the percentage originally reported. Notification to the FTA must be made within 20 business days from the date the variance is identified.

Additional information to be provided as part of the notification includes:

Confirmation of the variance and the date it was detected.
An explanation outlining the reason for the difference.
Information on any changes in business activities.
Details and nature of such changes, if applicable.
Full-year recovery rate calculations, including an Excel-based annual washup.

If a Registrant does not inform the FTA of a variance greater than 10% within 20 Business Days, or fails to reply to the FTA’s request within 40 Business Days, the FTA may decide that the approved special method is no longer applicable from the date the variance was first identified.

Conclusion

This update issued by Federal Tax Authority marks a significant step forward by introduction of the Specified Recovery Percentage (SRP) to reduces administrative burden and closely monitor variance and recovery rates. Businesses must adopt a proactive approach in assessing their eligibility, preparing application and complying on going reporting obligations.

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Insights

Profit Margin Scheme under UAE VAT: A Comprehensive Guide for Businesses

Insights

March 30, 2026

The UAE VAT regime generally requires VAT to be charged on the full value of taxable supplies. However, for certain categories of goods, this approach can lead to unfair double taxation, particularly where VAT incurred earlier in the supply chain cannot be recovered. To address this, the Federal Tax Authority (FTA) has introduced a special optional mechanism known as the Profit Margin Scheme.

This article provides a practical and detailed overview of the Profit Margin Scheme under UAE VAT, including eligible goods and transactions, calculation methods, invoicing and record-keeping requirements, and common examples to help businesses apply the scheme correctly.

What is the Profit Margin Scheme?

The Profit Margin Scheme is an optional VAT accounting method available to resellers of certain goods. Instead of charging VAT on the total selling price, VAT is calculated only on the difference between the selling price and the purchase price.

When Can the Profit Margin Scheme be Applied?

The Profit Margin Scheme may be applied in the following circumstances:

Resale of eligible goods acquired from:
- A non-VAT registered person, or
- A VAT-registered supplier who already applied the Profit Margin Scheme

Sale of goods where input VAT recovery was blocked under Article 53 of the VAT Executive Regulations, such as motor vehicles available for private use.

The scheme can only be applied if the goods were previously subject to VAT. It does not apply to goods that have never been subject to VAT.

Importantly, the scheme is optional and can be applied on a supply-by-supply basis, provided all conditions are met.

Eligible Goods under the Profit Margin Scheme

The scheme applies only to specific categories of goods:

1. Second-Hand Goods

Second-hand goods are tangible movable items that are suitable for further use as they are, or after repair, without changing their original function.

Common examples include:

Used cars
Mobile phones
Furniture
Electronic equipment

2. Antiques

Antiques are goods that are more than 50 years old, such as antique furniture, artwork, or collectibles. Businesses must retain sufficient evidence to prove:

The age of the goods, and
That VAT was previously imposed on them

3. Collector’s Items

Collector’s items include:

Stamps
Coins and currency
Items of scientific, historical, or archaeological interest

These goods typically derive value from rarity and collectability. Proper documentation is essential to support their eligibility under the scheme.

Importation of Goods – Key Considerations

As a general rule, the Profit Margin Scheme does not apply to imported goods, because import VAT is usually recoverable under normal VAT rules.

However, if import VAT recovery is blocked under Article 53, the scheme may be applied on resale.

Eligible goods & applicability of the Profit Margin Scheme

Example	Scenario	Applicability
Repairs without change in nature	“Company A” a used car dealer purchases a vehicle from a private individual “Mr. B”, carries out servicing and minor repairs, and resells it	Since the car retains its original purpose, it qualifies as a second-hand good under the scheme. “Company A” can apply the scheme.
Goods not previously subject to VAT	“Company A” purchased a used car from a private individual ” Mr. B” who acquired it on 2017.	Since, the car was purchased before the implementation of VAT, the car has never been subject to VAT & hence “Company A” cannot apply the scheme.
Goods previously subject to VAT	“Company A “purchased a used furniture from a non-registrant ” Mr. B” in 2019. Mr. B has bought the furniture by paying VAT with proper Tax invoice.	If Mr. B provide the copy of tax invoice with company A, then Company A has proof that the furniture was previously subject to VAT & can apply the scheme when reselling the furniture, provided all the other conditions are met.
Seller applied scheme	“Company A” purchases second hand goods from a non-registrant & sold some of these goods to “Company B” a registrant by applying the Scheme.	“Company B” can apply the scheme if he is reselling the goods provided all the other conditions are met.
Resale of imported good	“Company A” a taxable antique dealer imports antiques into UAE and pays import VAT.	“Company A” cannot apply the scheme when reselling the antiques as the import VAT is recoverable by company A in accordance with the normal Input Tax recovery rules.

Calculating VAT under the Profit Margin Scheme

Step 1: Determine the Profit Margin

Profit Margin = Selling Price – Purchase Price

The purchase price includes the cost of the goods and any directly related costs such as transport and installation cost.

The selling price includes all consideration received for the supply.

Step 2: Calculate VAT on the Profit Margin

VAT is calculated using the VAT fraction:

VAT = Profit Margin * (5/105)

Computation of VAT on Profit Margin Scheme

Example	Scenario	Computation	VAT Amount
Eligible goods sold for profit	A used car dealer buys a car for AED 100,000 and sells it for AED 200,000.	Purchase Price (A) = AED 100,000 Selling Price (B) = AED 200,000 Profit Margin (C= B-A) = AED 100,000 VAT on Profit Margin = C*(5/105) = AED 4,761.90	4,761.90
Purchase price including costs	A business purchases a car for AED 100,000 and incurred AED 5,000 as transportation costs. They sold the car for AED 250,000.	Purchase Price (A) + associated costs = AED 105,000 Selling Price (B) =AED 250,000 Profit Margin (C= B-A) = AED 145,000 VAT on Profit Margin = C*(5/105) = AED 6,904.76	6,904.76
Goods with Blocked Input VAT (Article 53)	A Company buys a luxury car for the business & its CEO’s personal. The price of the car is AED 500,000 Plus AED 25,000 VAT. VAT was not recovered due to Article 53(1)(b) of VAT Executive Regulations. Company sells the car for AED 530,000	Purchase Price (A) = AED 525,000 Selling Price (B) = AED 530,000 Profit Margin (C= B-A) = AED 5,000 VAT on Profit Margin = C*(5/105) = AED 238.10	238.10

Goods Sold at a Loss or Break-Even

If eligible goods are sold:

At a loss, or
With no profit

No VAT is payable under the Profit Margin Scheme. However, losses cannot be offset against profits from other transactions.

Computation of VAT on Profit Margin Scheme for goods sold at loss or no profit

Scenario

Computation

VAT Amount & Justification

“Company A” a used car dealer, sold four cars & applied the scheme on all of them.”

Car	Selling Price	Purchase Price	Profit Margin	VAT
Car 1	10,000.00	5,000.00	5,000.00	238.10
Car 2	20,000.00	10,000.00	10,000.00	476.19
Car 3	25,000.00	25,000.00	–	–
Car 4	5,000.00	20,000.00	(15,000.00)	–
Total	60,000.00	60,000.00	–	714.29

Even though, there is no profit during the whole period, the company has to account for VAT on the two cars that was sold on profit. i.e., AED 714.29. Since Cars 3 & 4 are not sold for profit, no output tax needs to be reported for the same. The loss made on the supply of car 4 cannot be settled off against the profits made on the supply of cars 1 & 2.

Invoicing and Record-Keeping Requirements

When applying the scheme:

A valid tax invoice must be issued
The tax invoice must clearly state that VAT is charged under the Profit Margin Scheme
The VAT amount must not be shown separately with the note mentioning in the tax invoice that vat is charged under profit margin scheme

Record-Keeping

Businesses must maintain:

A stock register for goods sold under the scheme
Purchase invoices or self-issued purchase documents for non-registrants
Evidence that goods were previously subject to VAT
Seller details, dates, consideration, and signatures where applicable

Proper documentation is critical in case of an FTA audit.

VAT Return Reporting

When applying the Profit Margin Scheme:

The relevant checkbox must be selected in the VAT return
Box 1 should include:

- Selling price net of VAT on the margin
- VAT amount relating to the profit margin

Box 9 should include:

- Purchase price of goods intended for resale under the scheme
- No VAT amount
- Purchase price of the goods intended to be sold under the scheme should be reported in the Tax period these goods are acquired.

Goods sold at a loss are still included in the selling price figure, but no VAT is reported for them.

Example – Reporting in the VAT return

Company A purchased a mobile phone for AED 1,500 from Mr. B in January 2025 and sold it to Mr. C in March 2025 for AED 1,710. Company A files VAT returns on a monthly basis.

The purchase of the mobile phone should be reported in Box 9 of the VAT return for January 2025 with an amount of AED 1,500.

The sale of the mobile phone should be reported in Box 1 of the VAT return for March 2025, showing AED 1,700 in the amount column and AED 10 as VAT on the profit margin.

Conclusion

The Profit Margin Scheme is a valuable VAT relief mechanism for businesses dealing in second-hand goods, antiques, collector’s items, and assets with blocked input VAT. When applied correctly, it prevents VAT cascading and ensures that VAT is charged only on the true value added by the reseller.

However, the scheme comes with strict eligibility conditions, detailed documentation requirements, and specific reporting obligations. Incorrect application can expose businesses to penalties and reassessments by the FTA.

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Research and Development (R&D) Tax Incentive: A UAE Ministry of Finance Initiative

Insights

March 25, 2026

In 2025, the UAE Ministry of Finance indicated that, to encourage Research and Development (R&D) activities, foster innovation, and support economic growth in the UAE, an R&D tax incentive was being considered, with effect proposed for tax periods commencing on or after 1 January 2026.

Pursuant to this policy signal, the UAE issued Cabinet Decision No. 215 of 2025 (CD 215 of 2025) on R&D Tax Credit on 31 December 2025. Thereafter, the Ministry of Finance announced the launch of Phase 1 of the UAE’s R&D Tax Incentives Programme on 18 March 2026, which has now been operationalised through Ministerial Decision No. 24 of 2026 (MD 24 of 2026).

Under Phase 1 a non-refundable R&D tax credit of up to 50% is available on qualifying R&D expenditure, subject to a cap of AED 5 million of qualifying spend per Qualifying Entity or Tax Group per Tax Period, resulting in a maximum potential credit of AED 2 million.

The settlement methodology for R&D tax credit lies in Federal Decree-Law No. 28 of 2025.

CD 215 of 2025 introduced the concept of R&D Tax Credit as a tax credit available to a Qualifying Entity in respect of Qualifying R&D Expenditure.

Applicability

CD 215 of 2025 and MD 24 of 2026 apply to tax period commencing on or after 1 January 2026.

Qualifying entity

CD 215 of 2025 provides, that for an entity to be considered a qualifying entity, the requirements are:

It should be a juridical person, which is either a UAE juridical person, including a Free Zone Person,that is subject to CT and/or top-up tax and carries on Qualifying R&D Activities, or foreign juridical persons undertaking such activities through a UAE permanent establishment.
It should carry on R&D activities
It should be subject to CT and/ or Top-up Tax.

For a Qualifying Free Zone Person (QFZP) to be considered a qualifying entity, CD 215 of 2025 imposes additional condition i.e. QFZP shall be subject to 9% CT on the relevant taxable income derived from qualifying R&D activities or it shall be subject to top-up tax in the relevant fiscal year.

The following entities shall not be considered as qualifying entities:

An entity that is neither subject to CT nor Top-up Tax
An entity that has opted for Small Business Relief

Qualifying R&D expenditure

CD 215 of 2025 categories Qualifying R&D Expenditure as below:

Staff costs
Consumable costs
Subcontracting fee
Arm’s length share of contributions under cost contribution arrangements,
Any other category of expenditure that may be specified by the Minister.
Certain capitalised costs relating to internally generated intangibles arising from qualifying R&D activities may fall within the scope of qualifying expenditure

Further, MD 24 of 2026, defines the above categories and provides specific conditions for inclusions and exclusions. For example, in staff cost a 30% upliftment is to be applied, it shall not include employee stock option plans, it shall not include intra-group recharges etc.

CD 215 of 2025 also lay down baseline conditions for such expenditure to qualify. In particular:

the expenditure must be incurred wholly and exclusively for qualifying R&D activities;
must amount to at least AED 500,000 (excluding upliftment) per R&D project in the relevant tax period or fiscal year;
must constitute deductible expenditure under CT law;
must not be funded by a government grant, to the extent recorded in financial statement; and
must not already benefit from any other incentive, credit, exemption or relief under the CT Law or any other legislation in the UAE.

Qualifying R&D Activities

The R&D tax credit is available in respect of Qualifying R&D Activities carried out by a Qualifying Entity. For this purpose, an activity will be regarded as a Qualifying R&D Activity only where it is undertaken in the UAE as part of an R&D Project and satisfies all the below mentioned five prescribed conditions:

Novel – aims to produce new findings
Creative – involves original concepts or hypotheses
Uncertain – the outcome or means of achieving it are not known in advance
Systematic – follows a plan and budget
Transferable or reproducible – results can be applied or replicated in other contexts

MD 24 of 2026 expressly states that this assessment should be made with reference to the OECD Frascati Manual. Activities in the fields of social sciences, humanities and the arts are excluded.

Conditions to Claim the R&D Tax Credit

A Qualifying Entity may claim the R&D tax credit for Qualifying R&D Expenditure only where it satisfies the following conditions:

The Qualifying Entity meets the minimum number of employees engaged in Qualifying R&D Activities
The Qualifying Entity obtains the necessary pre-approvals from the Council and complies with ongoing compliance requirements
The Qualifying Entity bears the financial burden of carrying out the Qualifying R&D Activities
The Qualifying Entity is beneficially entitled to a share in the returns derived from exploiting the intangibles or other results of the Qualifying R&D Activities
The relevant R&D Project has a specified objective to increase the stock of knowledge or devise new applications of available knowledge, and the Qualifying R&D Activities are directly undertaken with the purpose of addressing such objective

R&D Tax Credit

MD 24 of 2026, prescribes a progressive tax credit structure for the R&D tax credit, wherein the tax credit rates are as follows:

Maximum Qualifying R&D Expenditure (AED)	Average number of R&D Staff	Tax Credit Rate
First 1 million	At least 2	15%
> 1 million < 2 million	At least 6	35%
> 2 million < 5 million	At least 14	50%

MD 24 of 2026 clarifies:

That the credit is non-refundable.
The credit is calculated by applying the relevant rate to the portion of expenditure falling within each corresponding band.
To qualify for a specific rate, a Qualifying Entity or Tax Group must satisfy both the relevant expenditure threshold and the minimum average R&D staff threshold. If either threshold is not met, the credit rate is adjusted downward to the highest rate for which both thresholds are satisfied.
For Tax Groups with more than one Qualifying Entity, both the Qualifying R&D Expenditure and R&D Staff are aggregated for threshold purposes.

Carry-forward, transfer and claw-back

MD 24 of 2026 also sets out that unutilized R&D tax credits can be carried forward, transferred within a qualifying group, or passed in certain business restructuring cases, subject to continuity and anti-abuse conditions. Carry-forward is generally allowed only where there is at least 50% continuity of ownership, or where the entity continues to carry on the same or similar business despite a major ownership change. An exception applies to entities listed on a Recognised Stock Exchange.

Unused R&D tax credits may also be transferred to another juridical person, provided both the entities are at least 75% commonly owned (directly or indirectly), or one owns the other by that percentage, and the ownership condition is maintained from the period in which the credit arose until the period in which it is utilised. However, the transferee may use the transferred credit only against its current CT and/or Top-up Tax liability, and the transferred credit cannot itself be carried forward or re-transferred.

In the case of business restructuring, unused R&D tax credits may move to the transferee, provided the transferred business, including the associated qualifying R&D activities, continues for at least two years and the relevant restructuring conditions are satisfied. If the qualifying R&D activities are discontinued within two years, the regime provides for a claw-back, under which utilised credits must be repaid, unused credits are forfeited, and penalties may apply.

Key points to note:

No time limit has been prescribed for carry-forward
Current Tax Period credit must be utilized before any surplus is carried forward

Claim process

CD 215 of 2025 provides that a claim for the R&D tax credit must be submitted as part of the Tax Return or top-up tax Return and must be accompanied by specified supporting documents. These include proof of pre-approval from the Emirates Research and Development Council, a signed declaration by senior management confirming the accuracy of the information provided, a breakdown of qualifying R&D expenditure, audited financial statements, and any other documents that may be specified by the Minister.

Claims submitted after the due date for filing the Tax Return or Top-up Tax Return will not be considered unless accepted by the Authority in exceptional circumstances.

Record Keeping

MD 24 of 2026 provides that the qualifying entity shall maintain technical documentation for a period of 7 years following the end of the tax period to which they relate. Further, technical documentation includes -written, visual, and electronic records detailing the objectives, processes, methodologies, experiments, and findings associated with the qualifying R&D activities.

Anti-Abuse and Artificial Separation

If the Authority determines that one or more persons have artificially split their business or business activities to access or enhance the R&D tax credit, and the combined qualifying R&D expenditure across the wider business exceeds the relevant threshold, such arrangement may be treated as a tax advantage arrangement under Article 50 of the CT Law. In such cases, the Authority may counteract the arrangement, claw back any utilised R&D tax credit, and forfeit any unutilised credit.

Where any arrangement, contract or procedure is entered into mainly or partly to obtain or increase an R&D tax credit in a manner inconsistent with the economic substance or the genuine nature of the qualifying R&D activity, the Authority may adjust or disregard it, claw back any utilised credit, and forfeit any unused credit.

If, within five years from the end of the Tax Period or Fiscal Year in which the R&D tax credit was last claimed, the Qualifying Entity ceases to be a Taxable Person, becomes a Qualifying Free Zone Person, elects Small Business Relief, enters liquidation, or redomiciles outside the UAE, any utilised credit may be clawed back and any unused credit forfeited.

Key take-away

In summary, the UAE has now moved from policy intent to implementation of a structured R&D tax credit regime. CD 215 of 2025 of 2025 lays down the legal and conceptual framework for the credit, while MD 24 of 2026 operationalises Phase 1 by prescribing the applicable rates, staffing thresholds, qualifying activity criteria, and rules for utilisation, carry-forward, transfer and claw-back. The regime offers a potentially meaningful incentive for businesses undertaking genuine UAE based R&D activities, however, the access to benefit is subject to strict eligibility, pre-approval, documentation and continuity conditions.

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Summary of UAE Electronic Invoicing Guidelines

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Summary of UAE Electronic Invoicing Guidelines

Insights

March 16, 2026

This document, issued by the UAE Ministry of Finance, provides comprehensive guidance on the implementation of the Electronic Invoicing System in the UAE. It aligns with national visions like “We the UAE 2031” to enhance digital infrastructure, tax compliance, and economic efficiency. The guidelines cover the framework, scope, exclusions, rollout, preparation steps, invoice categories, scenarios, tax codes, penalties, and appendices for readiness. Below is a structured summary, with tables used for key enumerations and comparisons as per the document’s content.

Scope and Purpose

The guide targets commercial businesses, government entities, and tax/technology advisors. It explains the rules under Ministerial Decisions (MD) No. 243, 244, and 64 of 2025, and Cabinet Decision (CD) No. 106 of 2025. The purpose is to help understand impacts on processes, emphasizing that Electronic Invoicing is mandatory for UAE businesses (regardless of VAT status) unless excluded.

Highlights:

Mandatory for any Person conducting Business in the UAE unless the MD No. 243 of 2025.
Phased rollout per MD No. 244 of 2025.
Participant Identifier: Tax Identification Number (TIN, first 10 digits of TRN).
Unregistered entities must obtain TIN via FTA.
Tax Group members use individual TINs.

Key Terms

The document defines over 40 terms related to Electronic Invoicing. Here’s a summarized table of essential ones:

Term	Description
5-Corner Model	Framework for issuing/distributing Electronic Invoices: Supplier, Supplier’s ASP, Buyer’s ASP, Buyer, FTA.
Accredited Service Provider (ASP)	Service Provider accredited by Ministry to handle Electronic Invoicing.
Electronic Invoice	Structured XML document issued/transmitted via the system for automatic processing.
Participant Identifier	Unique ID (0235 + 10-digit TIN) for Peppol network identification.
Peppol	Pan-European framework adopted for UAE interoperability.
Tax Invoice	Includes Electronic Invoice for Taxable Supplies.
TIN	10-digit identifier for all FTA-registered entities.
UUID	A Universally Unique Identifier that is a unique 128-bit number generated by an algorithm in the Electronic Invoicing System for distinguishing each Tax Invoice. This is generated in addition to the Electronic Invoice sequential number.

Benefits

The system supports tax compliance, reduces errors, speeds up processes, and aids policy-making. Benefits include:

Government: Real-time data for audits, shrinking tax gaps, sustainability.

Businesses: Faster payments, fewer disputes, cost savings on processing/archival, streamlined VAT refunds.

Framework

UAE uses a decentralized 5-corner model based on Peppol PINT-AE specifications. Electronic Invoices are XML-only (no QR codes). Key aspects:

Process Flow: Supplier submits data to ASP; ASP validates/converts to XML, sends to buyer’s ASP and reports Tax Data to FTA; buyer’s ASP validates and delivers.

Responsibilities: Table summarizing general duties:

Activity	Supplier	Buyer	ASP
Exchange/report Electronic Invoices	✓	✓ (self-billed only)	✗ (but facilitates)
Calculate invoice values	✓	✗	✗
Secure transmission	✗	✗	✓
Agree data security with ASP	✓	✓	✗
Gather buyer’s Peppol ID	✓	✗	✗
Lookup supplier’s Peppol ID	✗	✗	✓
Generate UUID	✗	✗	✓

Time Period for Storage of records:

As per Article 3(1) of the Tax Procedures Executive Regulation, records related to the issuance, transmission, and receipt of Electronic Invoices must be retained for the following periods:

Taxable Persons: Data must be retained for 5 years from the end of the relevant Tax Period to which the records relate.

Persons other than Taxable Persons: Data must be retained for 5 years from the end of the calendar year in which the relevant document was created.

Real Estate Records: These must be retained for 7 years from the end of the calendar year in which the document was created.

In addition to the above retention periods, Taxable Persons are required to maintain the relevant data for an additional 4 years in cases where there is a dispute with the Federal Tax Authority (FTA), an ongoing tax audit, or where the FTA has issued a notification of its intention to conduct a tax audit.

Furthermore, where a Voluntary Disclosure is submitted within the fifth year from the end of the relevant tax period, the related records must be retained for an additional period of 1 year from the date of submission of the voluntary disclosure.

Scope of E-Invoicing in Specific Scenarios:

Persons: All conducting Business in UAE, regardless of VAT status or establishment. Use one ASP for sending/receiving.

Transactions: B2B, B2G, G2B, G2G. Excludes B2C/G2C (consumer supplies).

Special Scenarios:

Investment Holding Companies

Investment holding companies are usually established as legal entities to hold assets that generate passive income. If the income of such a company is derived only from passive sources (Dividend/Interest etc) and it does not carry out any business transactions, it would generally fall outside the scope of Electronic Invoicing.

However, in certain situations an investment holding company may recharge operational expenses such as management costs or other charges to related parties or third parties. These types of recharges are considered business transactions. In such cases, the investment holding company would be required to register for Electronic Invoicing and issue Electronic Invoices for those transactions in accordance with the phased implementation plan.

Tax Groups

Ministerial Decision No. 243 of 2025 outlines the scope and key obligations under the Electronic Invoicing System. As per this decision, business transactions carried out between members of the same VAT group are still considered within the scope of Electronic Invoicing. These transactions are not excluded simply because they occur within the same VAT group.

Temporary Grace period for VAT Group

A 24-month grace period (from 1 January 2027) applies to intra-group transactions within the same VAT group. During this period, electronic invoicing requirements under MD No. 243 of 2025 will not apply to such transactions

The grace period affects the timing of and does not exclude intra-group transactions from the scope of the Electronic Invoicing System. All applicable Electronic Invoicing obligations will apply in full to such transactions upon expiry of the grace period, in accordance with the mandatory implementation phase.

Non-UAE persons:

Where a person who does not have a place of residence in the UAE is required to issue Tax Invoices in accordance with the VAT Decree-Law, such invoices must be issued in the form of Electronic Invoices.

Exclusions from E-Invoicing

Sovereign activities by Government Entities (not competing with private sector).
Airline supplies: Passenger (Electronic Ticket/Misc Document); Goods (Airway Bill, temporary 24-month exclusion).
Exempt financial services (including zero-rated exports to non-residents).
Others as determined by Minister.

Phased Implementation

Rollout starts July 2026:

Pilot: Voluntary, invited participants from July 2026.
Voluntary: All from July 2026 (no penalties until mandatory).
Mandatory: Based on revenue/Government status.

Entity Type	Annual Revenue	Last Date to Appoint ASP	Last Date to Implement
Person	≥ AED 50M	31 Jul 2026	1 Jan 2027
Person	< AED 50M	31 Mar 2027	1 Jul 2027
Government	N/A	31 Mar 2027	1 Oct 2027

Invoice Categories, Scenarios, and Tax Codes Categories:

Electronic Tax Invoice,
Electronic Tax Credit Note.
Self-billed Electronic Tax Invoice.
Self-billed Electronic Tax Credit Note.
Commercial Invoice.
Electronic Credit Note

Electronic Invoice Scenarios:

No	Scenario	Description	Examples	Additional Considerations	Applies to Commercial Invoices
1	Free Zone	Transactions involving a Free Zone entity (supplier, buyer, or beneficiary) or supplies made within or from a Free Zone.	Supply to or from a Free Zone entity Supply of goods within a Free Zone Export of goods from a Free Zone	Electronic Invoice must include beneficiary details when the customer is a Free Zone entity. Customer = entity issuing the purchase order/contracting party. If the end user differs from the buyer, beneficiary details must be included.	Yes
2	Deemed Supply	Supplies treated as taxable under VAT law even without consideration.	• Free-of-charge supplies • Gifts exceeding threshold • Private use of business assets • Goods/services owned at VAT deregistration date	• Buyer electronic address must be 0235:9900000097. • If no invoice is issued to recipient, only reporting to FTA via ASP is required.	No
3	Margin Scheme	VAT is charged only on the supplier’s margin (difference between purchase and resale price).	• Used car sold under profit margin scheme • Gallery reselling artwork purchased from private collectors	• VAT amount does not need to be displayed. • VAT value should be recorded as “0” in the Electronic Invoice.	No
4	Summary Invoice	Multiple transactions with the same customer during a specific period consolidated into a single invoice.	• Bank issuing monthly invoice summarizing multiple services	• Certain invoice-level fields can be zero or positive for Peppol validation. • If total payable is negative, issue an Electronic Credit Note instead.	Yes
5	Continuous Supply	Supplies provided on an ongoing or recurring basis with periodic invoicing.	• Monthly advisory retainer • Delivery of materials in installments • Milestone-based payments	• For retention amounts, issue a separate commercial document showing milestone calculations. • Retention should not appear on the Electronic Invoice. • When retention becomes payable, issue separate electronic Tax Invoice with VAT.	Yes
6	Agent Billing	A disclosed agent issues invoices on behalf of a principal.	• Insurance broker collecting premiums on behalf of an insurance company	• Responsibility to issue Electronic Invoice remains with the supplier (principal) even if issued by the agent.	Yes
7	Supply through E-Commerce	Supplies made through an Electronic Commerce Medium as defined under Ministerial Decision No. 26 of 2023.	• Retailer selling goods through its website • Goods sold via an e-commerce marketplace	• Supplier remains responsible for issuing the Electronic Invoice, even if the platform generates it.	Yes
8	Exports	Goods or services supplied to customers outside the UAE.	• UAE wholesaler exporting cosmetics to Kuwait • UAE IT firm providing services to a client in France	• Tax Invoice must be issued as an Electronic Invoice and may be provided to Customs. • If buyer has no Peppol ID, use endpoint 0235:9900000099.	No

Tax categories

Tax Category	Description
Standard Rate	Taxable Supply at 5% VAT.
Exempt from VAT	In-scope but exempt (e.g., financial services).
Out of Scope	Place of supply outside UAE or exclusions.
Reverse Charge	Domestic supplies of certain goods (e.g., electronics, metals).
Zero Rated	Subject to 0% VAT (e.g., exports).
Margin Scheme	VAT on margin (e.g., second-hand goods).

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UAE Corporate Tax Update: Introduction of Advance Tax Payments

Insights

January 28, 2026

The Federal Tax Authority (FTA) has introduced an option for taxpayers to make advance Corporate Tax (CT) payments. Advance tax payments are applicable from financial year 2026 and may be adjusted against the next CT return or applied towards future outstanding tax liabilities.

This initiative is a welcome development, as it enables taxpayers to avoid last-minute payment challenges, and reduce the risk of late payment penalties.

Taxpayers may now make advance payments by selecting one of the following three options on the FTA portal:

Payment towards the next tax return filing: Under this option, companies with financial year ending in 2026 shall be eligible to make the advance CT payments. The advance tax amount paid will be kept on account until the next CT return is filed. Once the return is processed, the payment will be adjusted against the tax payable, and any excess will automatically be used to settle any remaining outstanding balances.

Payment towards future outstanding liabilities: Under this option, the advance payment is kept on account and will be automatically adjusted against any future tax liabilities that may arise on your FTA account.

Instalment Plan – Down Payment: This option allows taxpayers to make an advance payment specifically towards a penalties instalment plan. To proceed, taxpayers must select the relevant instalment plan application and make the required payment as instructed by the FTA. This payment helps activate the penalties instalment plan.

This development supports more proactive Corporate Tax payment planning and cash flow optimisation.

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Navigating the New Era of UAE Tax Compliance: A Guide to Cabinet Decision No. 129 of 2025 & Cabinet Decision No. 106 of 2025

UAE Tax Compliance 2026: Cabinet Decision No. 129 of 2025 & Cabinet Decision No. 106 of 2025

Insights

January 13, 2026

Two important regulations issued in October 2025 have reshaped the UAE’s tax enforcement system, shifting it away from punitive penalties toward a fairer and more accurate digital approach.

1. Administrative Penalty Reform (Cabinet Decision No. 129 of 2025)

This decision is effective from 14th April 2026; it has replaced the long-standing Cabinet Decision No. 108 of 2021. It marks a shift toward transparency by replacing heavy, compounding fines with a system rewarding voluntary disclosure and proactive correction.

2. The E-Invoicing Enforcement Framework (Cabinet Decision No. 106 of 2025)

As the UAE introduces phase wise e-invoicing from FY 2026 onward, creating a fully digitized ecosystem. Cabinet Decision No. 106 establishes penalties for non-compliance with the e-invoicing system. This framework ensures a smooth and accurate transition from traditional paper or PDF invoices to structured XML/JSON formats. The new penalties highlight the critical importance of technical readiness and real-time data integrity.

Key Highlights of the Reform

Key amendments in the New Decision involve:

Decoupling from Compounding Rates: The complex “2% + 4%” late payment model is substituted by a more straight forward annual percentage.

24-Month Rule: The repeat violations are strictly defined to be the ones which have taken place within a window of 24 months from the previous breach.
Reduced Fixed Penalties: Substantial reduction in fixed penalties for administrative errors such as failure to submit records in Arabic or late update of registration.
The “Voluntary” Grace Period: If your business adopts e-invoicing voluntarily before your mandatory phase begins, you are exempt from these penalties.
Recipient Accountability: For the first time ever, buying organizations have a legal responsibility to know whether the systems they are using are healthy or not. If you are not getting e-invoices from an obligated supplier, you’ll need to report the failure to avoid daily fines.

Old Provisions vs. New Provisions: Comparison Table

The following table outlines the most key adjustments that companies should be paying attention to prior to the effective date of April 2026.

Violation Type	New Provision (CD 129/2025)	Old Provision (CD 108/2021)	Key Shift
Record Keeping	AED 10,000 for each Violation; AED 20,000 if repeated within 24 months	AED 10,000 (In the first instance); AED 20,000 (In the second instance)	Window of 24 months introduced from the previous offense
Arabic Submission	AED 5,000	AED 20,000 for failure to submit records in Arabic	Major relief for administrative lapses.
Late Payment of Tax	Monthly penalty of 14% per annum on unpaid tax; calculated monthly from due date	2% immediate + 4% monthly (Capped at 300%)	Removal of maximum 300% penalty on payable tax.
Incorrect Tax Return	AED 500, unless corrected within filing deadline or through Voluntary Disclosure (VD) without tax difference	AED 1,000 (1st time); AED 2,000 (repeat)	Simplified Fixed Fines:
Voluntary Disclosure (VD)	1% per month (or part thereof) on the tax difference from the original due date until the VD is submitted.	Tiered: 5% to 40% based on age of error	Incentivizes immediate self-correction.
Audit Discovery (No VD)	15% fixed penalty + 1% monthly or part of the month	50% fixed penalty + 4% monthly or part of the month	Dramatic reduction in “punitive” audit costs.
Taxable Person Amendment	AED 1,000 (1st time) AED 5,000 (if repeated within 24 months from the date of the last violation.)	AED 5,000(1st time) AED 10,000(if repeated)	Alignment with administrative reality.
Legal Representative Notification	AED 1,000	AED 10,000	Alignment with administrative reality.

Practical Examples of the Penalties

Violation Type	Scenario	New Penalty	Old Penalty	Key Benefit/Impact
Late Payment Penalty	VAT of AED 100,000 unpaid for 6 months	14% p.a. × 6/12 = AED 7,000	2% for one month (AED 2,000) + 4% monthly for 5 months (AED 20,000) = AED 22,000	AED 15,000 saving due to shift from compounding monthly penalties to a flat annual rate
Voluntary Disclosure (VD) filling	Error of AED 50,000 discovered after 10 months	1% per month (AED 5,000)	5% as VD filled within 1 year= AED 2,500	Variable Penalty has been increased

E-Invoicing Penalty Framework

Unlike general VAT penalties, e-invoicing fines are structured to address technical implementation, real-time transmission, and system integrity. Following are a breakdown of the violations and their respective penalties:

Violation Type	Penalty Amount	Cap / Frequency
Failure to Implement EIS (or appoint an Accredited Service Provider)	AED 5,000	Per month (or part thereof)
Failure to Issue/Transmit E-Invoice	AED 100	Per Electronic invoice (Max AED 5,000/ month)
Failure to Issue/Transmit E-Credit Note	AED 100	Per Electronic credit note (Max AED 5,000/month)
Failure to Notify FTA of System Failure	AED 1,000	Per day of delay or part thereof (Applies to Issuer & Recipient)
Failure to Notify ASP of Data Changes	AED 1,000	Per day of delay or part thereof (Applies to Issuer & Recipient)

Practical Examples of the Penalties

Example	Scenario	Penalty	Key Benefit/Impact
Implementation Delay (Large Taxpayer)	ERP–ASP integration delayed by 2.5 months beyond 1 Jan 2027	AED 5,000 per month × Jan, Feb & part of March = AED 15,000	Penalty linked to duration of delay, not transaction value
High-Volume Transaction Errors	Failure to transmit 80 structured e-invoices in a month	80 × AED 100 = AED 8,000 → Capped at AED 5,000 per month Final penalty will be AED 5,000	Monthly cap protects high-volume businesses
System Failure not reported to FTA	API down for 5 business days; failure not reported to FTA	AED 1,000 per day × 5 days = AED 5,000	Penalty applies to both seller & buyer if aware and not reported

To understand this in depth financially, it’s important to see how these rules apply in practical applications:

In Conclusion: The Cabinet Decision No. 129 and 106 of 2025

The Cabinet Decision No. 129 of 2025 can be considered in the UAE’s tax journey-from a system that would focuses on fair compliance. Penalties have relaxed, but the FTA attention to accuracy remains sharp as ever.

Thus, businesses have until its effective date 14th April 2026, to review their past filings and current accounting systems. Professional oversight is required in transitioning into this new framework to ensure that your business will remain compliant and make sure to benefit from the reduced penalty rates.

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Advance Pricing Agreement in UAE

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January 6, 2026

The Advance Pricing Agreement (‘APA’) programme offers a voluntary mechanism for a Person to enter into an agreement for determining the Arm’s Length Price of Controlled Transactions over a period of time and preventing the risk of TP disputes and litigation.

APA is an agreement by the Authority with a Person, which sets the criteria to determine the Arm’s Length Price in relation to Controlled Transactions entered or to be entered by that Person with its Related Party/Parties, over a fixed period of time.

Key Benefits of an Advance Pricing Agreement

Predictability
Facilitated collaboration
Reduced Disputes
Prevention of double taxation
Prevention from risk of TP disputes
Streamlined compliance

Key Aspects of an Advance Pricing Agreement

Applicability
Eligibility & Materiality Threshold
APA Period
APA Fees
APA Application Timeline

Types of APAs:

An APA can be of the following types:

UAPA: A UAPA is an agreement between a Person and the FTA for domestic and cross border Controlled Transactions. The UAPA shall be binding only on the FTA, and the Person that is a party to the UAPA, to provide tax certainty exclusively from a UAE Corporate Tax Law perspective. The UAPA is not binding on any foreign taxpayer or foreign tax administration that may be the counterparty to the Controlled Transactions covered by the UAPA.

Bilateral APA (‘BAPA’): A BAPA is an agreement between competent authorities of two jurisdictions reached through a MAP. A BAPA provides tax certainty in relation to Controlled Transactions in the UAE and the relevant foreign jurisdiction.

Multilateral APA (‘MAPA’): A MAPA is a set of agreements between competent authorities of more than two jurisdictions reached through a MAP.

Stages of APA

Stage 1 – Pre-filing consultation

A Person proposing to enter into an APA must make a request to the FTA for a pre filing consultation. The purpose pre-filing consultation is to enable the FTA and the Person to understand the possibility of entering into an APA. Only a Tax Agent registered for Corporate Tax purposes with the FTA can submit the APA Request on behalf of the Person in the prescribed form. Communication with the FTA on the APA programme can be submitted from 30 December 2025. FTA aims to conclude pre-filing consultations within 6–9 months of receiving the request.

A pre-filing consultation does not bind the FTA to enter into an APA and does not constitute an APA application. The FTA may reject a Person’s request, for any of the following reasons:

Indication of a tax avoidance strategy
Limited scope of APA
ALP can be determined beyond significant doubt
Forecast of significant restructurings
Unsatisfactory rationale to include Transactions
Unpredictable business

Stage 2 – Filing of an APA application

A Person may submit an APA application upon receiving notification to proceed. The application must be filed within 2 months of the FTA notification or at least 12 months prior to the commencement of the first Tax Period to be covered under the APA, whichever is earlier.

Indicative UAPA timelines (assuming January – December as the tax period)

APA pre-filing	APA pre-filing approval by FTA (assumed as six months)	APA application	APA covered tax periods
1-Jan-2026	30-Jun-2026	31-Aug-2026	2028-2032
1-Apr-2026	30-Sep-2026	30-Nov-2026	2028-2032
1-Jul-2026	31-Dec-2026	28-feb-2027	2029-2033

The FTA may reject an APA application under certain circumstances, including but not limited to:

Materiality threshold not met
APA doesn’t cover pre-filing consultation issues
Significant discrepancies between contracts and actual business
Changed Circumstances or Delayed Responses for requested information
Analysis is inadequate or unreliable
Application contains wrong or misleading information.

Stage 3 – Evaluation and negotiation

Once site visits, interviews, meetings, and the collection of all required information and documents are complete, the FTA will commence its evaluation and analysis. FTA shall prepare a Transfer Pricing analysis that addresses manner and key criteria of determining ALP, any other terms and conditions, including critical assumptions

The Person must provide written feedback on the FTA’s TP analysis within 30 Business Days. The FTA may allow a discussion of the TP analysis upon the Person’s request. If no mutual agreement is reached after negotiations, the APA may be closed without conclusion, with no refund of fees.

Stage 4 – Conclusion and Implementation of APA

The FTA shall discuss the implementation of the agreement with the Person. The FTA and the Person shall sign the APA agreement based on terms mutually agreed. A Person may withdraw an APA application anytime before conclusion. Withdrawal without valid justification, especially at an advanced stage, is discouraged. No refund of fees will be provided.

An APA is binding on signatories to the APA with respect to the Controlled Transactions for the Tax Periods covered under an APA. APA does not establish a precedent for any other Tax Periods of the Person, nor for any other Person that is not covered under the APA.

Advance Pricing Agreement Annual Declaration

A Person with an APA agreement must file an APA Annual Declaration for each covered Tax Period, in the format prescribed by the FTA. The APA Annual Declaration must be filed by the later of the following:

Within 90 Business Days of signing the APA, or
The due date for filing the Tax Return.

Revision, Cancellation, Revocation of APA

FTA May Revise an APA under following circumstances:

Change in UAE Corporate Tax affecting Controlled Transactions.
Change in business, economic, or other conditions requiring reassessment of critical assumptions.
Exceptional circumstances notified by the Person.

If revision is not feasible or no mutual agreement is reached, APA may be cancelled prospectively from the Tax Period in which the event occurred, remaining valid for prior periods.

FTA May Revoke or Cancel an APA under following circumstances:

Material misrepresentation in APA application or Annual Declaration.
Failure to comply with material terms and conditions.
Breach of critical assumptions.

APA may be revoked from the first Tax Period covered; previously governed Controlled Transactions become subject to Corporate Tax Law and Tax Procedures Law. Depending on severity, FTA may cancel APA prospectively, starting from the Tax Period of breach and applying to subsequent periods.

Renewal of APA

Application of renewal of APA may be made by the Person if there are no material changes to facts of the Controlled Transactions and the critical assumptions remain valid.

Renewal application shall be made at least three months before the expiry of the existing APA. Renewal request shall follow same procedures as filing of APA application, with the exception that a pre-filing consultation is not required.

In Conclusion: Advance Pricing Agreement

The APA programme provides an effective framework for achieving transfer pricing certainty and minimizing disputes by allowing taxpayers to agree in advance on arm’s length pricing for Controlled Transactions. With clearly defined eligibility criteria, timelines, and compliance requirements, APAs promote predictability, transparency, and alignment with OECD best practices. For eligible taxpayers, the programme serves as a valuable tool to manage transfer pricing risks and ensure sustained compliance under the UAE Corporate Tax regime.

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Amendments to the VAT Guide on Input Tax Apportionment – VATGIT1

March 30, 2026

Profit Margin Scheme under UAE VAT: A Comprehensive Guide for Businesses

March 25, 2026

Research and Development (R&D) Tax Incentive: A UAE Ministry of Finance Initiative

Insights

Tag: Insights

Insights

Required Information for Registration

Recommended Next Steps

Insights

What Has Changed?

Reason for the Extension

Approved Accredited Service Provider (ASP)

Empowering Local Businesses

Key Important Clarification

Key Takeaway

Insights

Who is a Director as per the public clarification (CTP010)?

Who is an Officer as per the public clarification (CTP010)?

Examples

Key Takeaways

Insights

Input Tax Apportionment

Specified Recovery Percentage (SRP)

Requirements for submitting an application for Special Input Tax apportionment to the FTA

Response times highlighted

Validity of Approved SRP

Notifying FTA in case of any variance

Conclusion

Insights

What is the Profit Margin Scheme?

When Can the Profit Margin Scheme be Applied?

Eligible Goods under the Profit Margin Scheme

Importation of Goods – Key Considerations

Calculating VAT under the Profit Margin Scheme

Goods Sold at a Loss or Break-Even

Invoicing and Record-Keeping Requirements

Record-Keeping

VAT Return Reporting

Conclusion

Insights

Applicability

Qualifying entity

Qualifying R&D expenditure

Qualifying R&D Activities

Conditions to Claim the R&D Tax Credit

R&D Tax Credit

Carry-forward, transfer and claw-back

Claim process

Record Keeping

Anti-Abuse and Artificial Separation

Key take-away

Insights

Scope and Purpose

Highlights:

Key Terms

Benefits

Framework

Time Period for Storage of records:

Scope of E-Invoicing in Specific Scenarios:

Temporary Grace period for VAT Group

Non-UAE persons:

Exclusions from E-Invoicing

Phased Implementation

Invoice Categories, Scenarios, and Tax Codes Categories:

Electronic Invoice Scenarios:

Tax categories

Insights

Insights

Key Highlights of the Reform

Old Provisions vs. New Provisions: Comparison Table

Practical Examples of the Penalties

E-Invoicing Penalty Framework

Practical Examples of the Penalties

In Conclusion: The Cabinet Decision No. 129 and 106 of 2025

Insights

Key Benefits of an Advance Pricing Agreement

Key Aspects of an Advance Pricing Agreement

Types of APAs:

Stages of APA

Advance Pricing Agreement Annual Declaration

Revision, Cancellation, Revocation of APA

Renewal of APA

In Conclusion: Advance Pricing Agreement