Five UAE VAT Areas the FTA Has Clarified

The UAE Federal Tax Authority (FTA) published five VAT directives in July 2026, each clarifying an area where businesses had been applying the tax law inconsistently. Together they cover judicial expert services, VAT group exits, digital currency valuation, life insurance fee structures, and deemed supplies.

Court expert fees and VAT group exits

Directive No. 1 of 2026, dated 8 July and listed on the FTA's legislation page on 10 July 2026, treats services from experts appointed by courts, judicial authorities, or arbitration centres as supplied in the course of business. The fees are consideration for a taxable supply, and payment by a government entity doesn't change that treatment. It settles a long-running question over whether judicial appointments sit outside normal commercial VAT rules.

Anyone doing expert witness or valuation work for UAE courts would need to look at whether they cross the mandatory registration threshold, then handle invoicing and reporting on those fees the same way they would for any other professional service.

Directive No. 2 of 2026, dated 8 July and listed 10 July 2026, takes effect on 1 August 2026. It deals with what happens when a company leaves a VAT tax group but keeps its own VAT registration.

Later adjustments to output tax or input tax tied to supplies or expenses from before the exit (credit notes, for instance, or corrections to input VAT already recovered) sit with the exiting entity rather than the group, where the original transaction was already declared in the group's return. The exiting registrant also needs records proving those transactions formed part of the group's earlier filings. Companies restructuring their VAT groups will need access to that trail after they leave.

Converting digital currency values into dirhams

Directive No. 3 of 2026, issued 14 July and published 17 July 2026, sets a standard method for converting digital currency values into dirhams for VAT reporting. Taxable persons pick three centralised digital currency exchange platforms from a list the FTA publishes, stay with the same three across the calendar year, and apply the numerical average of their rates at the date and time of supply or of payment. Records evidencing the rates from each platform have to be retained.

The FTA has indicated it will issue a separate clarification covering cases where a rate isn't available on the selected platforms. The eligible platform list sits with the FTA, so it's worth confirming the current version before committing to a selection for the year.

For businesses taking payment in crypto, this turns an open question into a fixed method that can be documented and checked later. It covers conversion methodology only, not the tax treatment of crypto assets themselves.

Insurance fees and deemed supplies

Directive No. 4 of 2026, also published 17 July 2026, addresses a long-standing grey area. Life insurance and life reinsurance are treated as exempt under UAE VAT rules, but it wasn't always clear whether fees charged alongside a policy shared that exemption.

The directive sets conditions for deciding whether a fee forms part of the exempt insurance supply or counts as a separate taxable service. Fees can stay exempt where they are necessary for and directly connected to the underlying contract, form part of the premium, and aren't charged separately. Fees that stand on their own as distinct services are taxed independently. Insurers and reinsurers will likely need to review how fees are structured, invoiced, and linked to policies to work out which side of that line they fall on.

Directive No. 5 of 2026, issued 20 July and published 22 July 2026, prescribes a cost-based method for valuing deemed supplies of services under Article 37 of the VAT Law. Free services, intra-group arrangements, employee benefits: situations that trigger VAT even without a direct charge.

The starting point is open market value, or the value of comparable services where market value can't be established. The profit element is then stripped out, based on the taxpayer's net profit margin from the previous year or a suitable industry average. What remains is adjusted for the share of direct and indirect costs that carried input VAT, and that figure becomes the deemed supply value. The directive includes a worked example, and businesses are expected to keep evidence supporting the margins, cost allocations, and calculations behind their numbers.

Anyone operating in these areas will want to compare their current VAT positions against the directives before the next filing cycle. Documentation and reporting responsibilities have shifted in several cases, and all five directives sit on the FTA's legislation page.

Key Takeaways

• Five FTA VAT directives were published in July 2026, covering judicial expert services, VAT group exits, digital currency conversion, life insurance fees, and deemed supplies.
• An entity that leaves a VAT tax group but stays registered reports later adjustments tied to the group's earlier transactions, with the directive effective 1 August 2026.
• Digital currency values are converted using the average rate from three FTA-listed exchange platforms, applied consistently through the calendar year.

Sources: Federal Tax Authority, PwC Middle East, Alvarez & Marsal, IR Global

Disclaimer: This content is for educational and informational purposes only. It is not legal, financial, investment, cybersecurity, medical, business, career, or other professional advice. Verify important information with official sources or qualified professionals before acting.