FTA Policy on Issuing Clarifications and Directives – UAE Tax Guide

The Federal Tax Authority (FTA) has issued an updated policy on Issuing Clarifications and Directives, effective from 1 March 2026. This policy explains how the FTA provides official tax clarifications, administrative exceptions, and input tax apportionment decisions for VAT, Corporate Tax, and Excise Tax in the UAE.

This guide explains the policy in simple terms for businesses and tax professionals in the UAE.

Legal Authority of FTA to Issue Clarifications

The FTA is legally authorized to issue clarifications and directives under the following laws:

• Federal Decree-Law No. 28 of 2022 – Tax Procedures Law
• Federal Decree-Law No. 8 of 2017 – VAT Law
• Federal Decree-Law No. 47 of 2022 – Corporate Tax Law
• VAT Executive Regulations
• Cabinet Decision No. 65 of 2020 – FTA Fees

These clarifications are binding on both the taxpayer and the FTA if issued officially.

Types of Clarifications and Directives Issued by FTA

The FTA issues the following types of clarifications and directives:

• Private Clarifications
• Public Clarifications
• Guides and E-learning
• Administrative Exceptions
• Input Tax Apportionment Decisions
• Advance Pricing Agreements
• Directives on Tax Transactions

Private Clarification (Important for Businesses)

A Private Clarification is a written clarification issued by the FTA to a specific taxpayer on a specific tax matter.

Conditions for Private Clarification

• The request must relate to UAE tax laws.
• The request must be based on an actual case (not a hypothetical case).
• All required documents must be submitted.
• The applicable fee must be paid.
• The issue must not be under tax audit.
• The issue must not involve tax evasion or tax avoidance.

Important Rule

The private clarification:

• Applies only to the taxpayer who applied for it.
• Is binding on the FTA.
• Remains valid unless the law changes or FTA withdraws it.
• Becomes invalid if FTA issues a public clarification on the same topic.

Public Clarifications and Guides

The FTA also issues Public Clarifications, Guides, and E-learning materials to explain tax laws. These clarifications apply to all taxpayers.

Before issuing public clarifications related to tax policy, the FTA must coordinate with the Ministry of Finance to ensure consistency with UAE tax policy.

Administrative Exceptions (VAT & Excise)

The FTA may grant Administrative Exceptions in special cases. These exceptions usually relate to:

• Tax invoices
• Tax credit notes
• Export evidence
• Extension of export time limit

Validity of Administrative Exception

• Usually valid for 3 years.
• Effective from the date of issue.
• Does not confirm the tax treatment but provides procedural relief.

Input Tax Apportionment Decision

If a business makes both taxable and exempt supplies and the standard input tax apportionment method is not fair, the business can apply to the FTA for:

• An alternative input tax apportionment method, or
• A fixed recovery percentage.

Conditions

• The business must be VAT registered for at least 6 months.
• 12 months registration required for fixed recovery percentage method.
• The standard method must be unfair.
• The alternative method must be more accurate and reasonable.

Approval Period

• The approved method must be used for 2 to 4 years.
• The FTA may require adjustment for the previous 3 years.

Important Deadlines

• If FTA requests additional information → must reply within 40 business days.
• If application started but not submitted → must submit within 40 business days.

Conclusion

The FTA clarification system allows businesses to obtain official confirmation on tax treatment, administrative exceptions, and input tax recovery methods. Businesses should consider applying for a Private Clarification where there is uncertainty in VAT or Corporate Tax treatment to avoid penalties and ensure compliance.

For official clarification requests, businesses can apply through the Federal Tax Authority portal:

Federal Tax Authority Website