The Federal Tax Authority (FTA) recently released FTA Decision No. 1 of 2025 and FTA Decision No. 2 of 2025 setting out their internal policy on several tax administrative matters. Below we provide a brief overview of the publications.
Tax Administration
FTA Decision No. 1 of 2025 on Cases of Extension of the Deadlines for Accepting the Submission of a Tax Assessment Review Request or a Request for Reconsideration
FTA Decision No. 1 outlines cases in which the deadline for accepting the submission of a tax assessment review request or a request for reconsideration may be extended or rejected.
The FTA may approve extending the deadline for acceptance of a tax assessment review or reconsideration request where non-compliance with the specified deadlines was due to one of the following cases (among others):
- The occurrence of an accident or a serious illness for the authorised signatory
- A temporary business disruption that is beyond the person’s control
- A damage of records due to a disaster
- A sudden discontinuation of business or business records due to the installation of a new
computer system - A case of force majeure as determined at the FTA’s discretion.
Conversely, the FTA will not extend the deadline for accepting the submission of a tax assessment review request or reconsideration request where:
- The taxpayer is unaware of their obligations
- The delay was caused by the negligence of a third party on whom the taxpayer relied such as a tax agent or a legal representative
- A complexity in the topic of the tax assessment review request or the request for reconsideration, due to which the taxpayer could not submit the request on time
- The applicant was busy running their business
FTA Decision No. 1 came into effect on 1 March 2025.
FTA Decision No. 2 of 2025 on FTA Policy for Issuance of Clarifications and Directives
On 19 February of 2025, the FTA released a new decision setting out their internal policy for issuing clarifications and directives. The decision came into effect on 1 March 2025.
The FTA Decision outlines various procedural considerations impacting the issuance of private clarifications, public clarifications, guides, and e-learning programs. It also provides guidance on the issuance of directives by the FTA, including administrative exceptions, approved input tax apportionment decisions and advance pricing agreements. Some notable aspects addressed in the decision include:
Clarifications
- Requirements that have to be met before the FTA will issue a clarification as well as cases where the FTA will reject such application;
- Minimum information required to submit a clarification request (refer to Annex A of the Decision);
- Scenarios where the FTA will consult with the Ministry of Finance (i.e. matters not clear in law), including the procedure to be followed and the potential exchange of information;
- Exchange of clarification request data with the Ministry of Finance where the request relates to issues related to BEPS Action Five;
- Framework regulating the implementation and enforcement of clarifications, including matters related to scope of application, binding nature, duration of effect and limitations on application; and
- Procedure by which the FTA shall issue clarifications, including timeframe and process to request additional information.
FTA Directives
Administrative exceptions – The FTA may grant administrative exceptions in relation to VAT and excise tax under certain circumstances, e.g. in relation to tax invoices, credit notes and proof of export. The FTA Decision sets out the conditions that must be met for the FTA to review such requests, the implementation framework that will apply to such exceptions (e.g. validity period) and the procedure that needs to be followed when issuing administrative exceptions.
Input Tax Apportionment Decisions – A Taxable Person may apply to the FTA for approval to use of a specified recovery percentage to calculate its recoverable Input Tax in any Tax Period based on the recovery percentage of the preceding Tax year. The FTA Decision sets out the conditions that must be met for the FTA to review such requests, the implementation framework that will apply to such exceptions (e.g. validity period) and the procedure that needs to be followed when issuing specified recovery percentage decisions.
Advance Pricing Agreements (APAs) – A person can apply to the FTA to conclude an APA with respect to a transaction or arrangement proposed or entered into in the form and manner as prescribed by the FTA (Article 59 of the CT Law). The Decision provides that unilateral advance pricing agreements shall be received by the FTA from the 4th quarter of 2025.
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We provide clients with specialist tax advice, planning and implementation support to achieve optimal tax outcomes for their business and personal interests in the UAE. Should you require support, please contact Theunis Claassen, our Head of Tax, to arrange an initial discussion.