UAE FTA issues new VAT Directives on judicial expert services and tax group exit adjustments

Directives on Tax Transactions No. 1 and No. 2 of 2026

IN BRIEF: On 8 July 2026, the Federal Tax Authority (FTA) issued two Directives on Tax Transactions confirming that (i) services provided by court-appointed judicial experts are taxable supplies for VAT purposes, even where fees are paid by a government entity, and (ii) a person who leaves a VAT tax group but remains VAT-registered must process adjustments relating to its pre-exit supplies and expenses, previously reported in the group’s returns, in its own tax returns.

VAT ON JUDICIAL EXPERT SERVICES

Directive No. 1 of 2026 applies to natural and legal persons registered in the Roster of Experts with the Ministry of Justice, a local judicial authority, or arbitration centres (“Judicial Experts”), who are appointed by a competent court to provide expert services. Under the Directive:

such expert services are regarded as supplied in the course of a Business in the UAE and constitute Taxable Supplies;

any amount received by the Judicial Expert for those services constitutes Consideration for a supply of services;

Judicial Experts must comply with all legally prescribed tax obligations, including registering for VAT where the registration requirements in Article 13 of the VAT Law and Article 7 of the VAT Executive Regulation are met, if not already registered; and

receiving the consideration from a Government Entity does not affect the VAT treatment of the supply.

ADJUSTMENTS AFTER LEAVING A VAT TAX GROUP

Directive No. 2 of 2026 clarifies the position of a person who ceases to be a member of a tax group but remains a VAT registrant. Under the Directive:

where adjustments arise relating to taxable supplies made, or taxable expenses incurred, by that person before leaving the tax group, the former member must make those adjustments in its own tax returns where the underlying supplies or expenses were previously declared in the tax group’s returns;

adjustments include reductions in the value of taxable supplies previously declared in the group’s returns, and reductions in the value of taxable expenses for which input tax was previously recovered through the group’s returns; and

the registrant must retain supporting documents and records evidencing that the adjustments relate to supplies or expenses previously declared in the tax group’s returns.

Directive No. 2 of 2026 is effective from 1 August 2026.

WHAT THIS MEANS

Judicial Experts who have treated court-appointed engagements as outside the scope of VAT, for example, because the appointment stems from a court order or fees are settled by a government body, should revisit that position: assess whether the VAT registration thresholds are met, account for VAT on expert fees going forward, and consider any historical exposure and whether voluntary disclosures may be appropriate.

Businesses that have recently left, or are planning to leave a VAT tax group should put processes in place to capture post-exit adjustments (such as credit notes or price reductions) that trace back to transactions reported by the group, coordinate with the group’s representative member so that adjustments are neither duplicated nor omitted, and ensure the documentation needed to evidence the adjustments and their relation to previously declared supplies/ expenses are there.