UAE Federal Tax Authority Issues Two New VAT Directives in 2026
Clarifications on Judicial Expert Services and Tax Group Exit Adjustments
The UAE Federal Tax Authority (FTA) has issued two new Tax Transactions Directives in 2026 providing important clarifications on the Value Added Tax (VAT) treatment of specific transactions.
The new directives address:
- VAT treatment of judicial expert services under Directive on Tax Transactions No. 1 of 2026.
- VAT adjustments following a registrant’s exit from a tax group under Directive on Tax Transactions No. 2 of 2026.
Both directives were issued on 8 July 2026 by His Excellency Mohamed bin Hadi Al Hussaini, Minister of State for Financial Affairs and Vice Chairman of the Federal Tax Authority.
1. VAT Treatment of Judicial Expert Services
Directive on Tax Transactions No. 1 of 2026
The FTA has issued a clarification regarding the VAT treatment applicable to services provided by judicial experts appointed by competent courts, judicial authorities, or arbitration centres.
Judicial Expert Services Considered Taxable Supplies
The directive confirms that where a natural person or legal entity registered in the official roster of experts with:
- The Ministry of Justice;
- A local judicial authority; or
- An arbitration centre,
is appointed by a competent court to provide expert services, such services are considered to be supplied in the course of conducting a business in the UAE.
Accordingly, these services constitute taxable supplies for VAT purposes, subject to the provisions of the UAE VAT Law.
Fees Received by Judicial Experts Are Consideration for Services
The directive clarifies that any amount received by a judicial expert for providing expert services represents consideration for the supply of services.
Therefore, fees charged for judicial expert services must be evaluated under the VAT rules applicable to taxable supplies.
VAT Registration Obligations
Judicial experts providing taxable services must comply with all VAT obligations, including VAT registration where the mandatory registration requirements are met.
A judicial expert who exceeds the VAT registration threshold requirements must register for VAT if they are not already registered.
Businesses and individuals providing judicial expert services should review their VAT position to determine whether registration, invoicing, and reporting obligations apply.
Payment by Government Entities Does Not Change VAT Treatment
The directive confirms that receiving payment from a government entity does not affect the VAT treatment of the supply.
Where judicial expert services qualify as taxable supplies, they remain subject to VAT regardless of whether the consideration is paid by a government body or another party.
Effective Date
Directive on Tax Transactions No. 1 of 2026 will be published in the Official Gazette and provides clarification effective from its issuance date.
2. VAT Adjustments After Leaving a Tax Group
Directive on Tax Transactions No. 2 of 2026
The second directive provides guidance on VAT adjustments required when a registered person exits a UAE VAT Tax Group while remaining registered for VAT purposes.
Requirement to Adjust VAT Returns After Leaving a Tax Group
Where a person:
- Ceases to be a member of a VAT Tax Group;
- Continues to be registered for VAT; and
- Has adjustments relating to taxable supplies or taxable expenses occurring before leaving the Tax Group,
the person must make the necessary VAT adjustments in their own VAT returns.
This applies where the relevant supplies or expenses were previously reported within the VAT returns of the Tax Group.
Types of Adjustments Covered
The directive confirms that adjustments include:
Reduction in Previously Reported Taxable Supplies
Where the value of taxable supplies previously declared by the Tax Group needs to be reduced, the former member must account for the adjustment in its VAT return.
Reduction in Previously Claimed Input Tax
Where taxable expenses were previously reported by the Tax Group and input VAT was recovered, any subsequent reduction in those expenses must also be adjusted.
Record Keeping Requirements
The registrant must maintain supporting documentation and records demonstrating that:
- The adjustments relate to taxable supplies or taxable expenses; and
- These transactions were previously reported in the VAT returns of the Tax Group.
Adequate documentation should be retained to support the adjustments in case of an FTA review or audit.
Effective Date
Directive on Tax Transactions No. 2 of 2026 will be effective from:
1 August 2026
