In July 2026 the Federal Tax Authority created Directives on Tax Transactions: acts that, unlike clarifications, bind both the taxpayer and the Authority. Five have been issued. Anyone within their scope no longer has interpretative room.
What happened
Between 8 and 20 July 2026 the Federal Tax Authority (FTA) introduced Directives on Tax Transactions, a category of public decision that establishes how the legislation is to be applied to defined categories of transactions. Five have been issued: judicial expert services (No. 1), VAT adjustments following exit from a VAT group (No. 2, in force from 1 August 2026), conversion of digital currencies (No. 3), fees on life insurance and reinsurance (No. 4), and the valuation of deemed supplies of services (No. 5).
What changes in practice
What changes is the weight of what the Authority publishes. A public clarification describes how the Authority reads a provision and leaves room for discussion; a guide orients; a directive closes the question. Anyone within the scope of a directive has no alternative treatment available, and the Authority cannot depart from it either. A tax position built on professional advice that now conflicts with a directive starts from a losing footing.
Who it applies to
Any person registered for VAT in the UAE. And, indirectly, anyone who has received professional advice on areas now covered by one of the five directives.
The exposure
Many tax positions built over recent years rest on reasonable interpretations formed in the absence of explicit rules. They were not wrong at the time: it is the space they occupied that has gone. The risk is continuing to follow an approach superseded by a binding act and having it challenged retrospectively across the whole period.
What to do now
Establish whether any of the five directives touches the company's activity and, if so, compare the treatment applied so far with the one now imposed. The two affecting the widest range of businesses are No. 3, on digital currencies, and No. 5, on services supplied free of charge.
Sources
- https://tax.gov.ae/en/legislation.aspx
- https://kpmg.com/ae/en/insights/tax-insights/fta-issues-five-binding-vat-directives-on-tax-transactions.html
Published 19 August 2026 on the basis of public sources and official United Arab Emirates instruments. This is not legal or tax advice. Verify your position with a qualified professional before acting.