UAE: Binding VAT directives on tax transactions
Directives on tax transactions are binding on both the FTA and taxpayers that fall within its scope
The Federal Tax Authority (FTA) recently issued five new “directives on tax transactions,” a new category of public decisions that establishes the basis for applying or implementing provisions of UAE tax legislation in relation to specific categories of tax transactions.
Background
A directive on tax transactions is binding on both the FTA and taxpayers that fall within its scope. Unlike a public clarification, a directive generally remains effective until it is replaced, withdrawn, or the legislation on which it is based is amended or repealed. The directives are issued following approval by the FTA Board of Directors, or a committee formed by the Board, and in coordination with the UAE Ministry of Finance.
VAT directives
Directive No. 2 of 2026, concerning VAT adjustments following a registrant's exit from a VAT group, expressly became effective on August 1, 2026 (read TaxNewsFlash). The remaining four directives do not specify a separate effective date and address the following VAT matters:
- Judicial expert services
- Conversion of digital currency into UAE dirhams
- Fees relating to life insurance and life reinsurance contracts
- Valuation of deemed supplies of services
Read an August 2026 report prepared by the KPMG member firm in the UAE