UAE Refines Tax Procedures Framework Through Targeted Amendments

The UAE Cabinet has issued Decision No. 17 of 2026, introducing amendments to Cabinet Decision No. 74 of 2023 (Executive Regulation of Federal Decree-Law No. 28 of 2022 on Tax Procedures). The amendments are effective from 1 April 2026.

The changes are not structural; however, they address specific areas where clarification or enhanced control was required. In practice, these refinements affect how taxpayers manage record retention, voluntary disclosures, audit interactions, and data governance.

Record Retention Linked to Refund Exposure (Article 3):

A new provision under Article 3 introduces an additional retention requirement in cases where a refund application remains unresolved.
Where such an application is under review, taxpayers are required to retain relevant records for an additional two years, provided the claim was submitted within the statutory timeframe.
This amendment effectively links record retention to open tax positions, ensuring that documentation remains available for review or audit for as long as the exposure exists.

Greater Consistency in Voluntary Disclosure (Article 10):

The amendment introduces a two steps hierarchical correction mechanism designed to reduce unnecessary Voluntary Disclosures for immaterial errors.

Step 1 – Correction through a future Tax Return (Primary / Preferred Route)

Under the amended Article 10, where a refund related error of AED 10,000 or less arises from an incorrect Tax Return or Tax Assessment, the law now prioritises return based self correction, provided that:

• The Taxable Person continues to be obligated to submit Tax Returns, and
• There exists a Tax Return that has not yet fallen due at the time the error is identified.

In such cases, the Taxable Person is required to correct the error in:

• The next Tax Return due, or
• The Tax Return for the Tax Period in which the error was discovered, whichever is earlier.

Step 2 – Voluntary Disclosure as a fallback mechanism

Where correction under Step 1 is not possible, a Voluntary Disclosure becomes mandatory.

This applies where:

• No Tax Return exists through which the error can be corrected, including situations such as:

• Tax deregistration
• Submission of a final Tax Return
• Expiry of all relevant filing periods

In these circumstances, the Taxable Person must:

• Submit a Voluntary Disclosure within 20 Business Days from the date the error is identified.

Formalisation of Extended Audit Measures (Article 18):

A new provision under Article 18 clarifies that the Federal Tax Authority may extend the period during which documents or assets are retained as part of a tax audit.

While such practices may have existed operationally, the amendment provides an explicit legal basis for extended retention, particularly in complex or prolonged audits. Notification to the taxpayer is required where feasible.

This reinforces the need for businesses to maintain accessible and well-organised documentation throughout the audit lifecycle.

Alignment of Refund Terminology with Practice (Article 26):

Article 26 has been revised to refer to “Credit Balance Refund Procedures.”

This change aligns the regulation with the mechanics of the UAE tax system, where refunds arise from excess input tax or overpayments reflected as credit balances rather than standalone refund claims.

Under UAE VAT law, a taxpayer does not automatically receive a refund just because tax is overpaid. Instead, Excess VAT (e.g., excess input tax or overpaid VAT) Is first recorded in the taxpayer’s VAT account as a credit balance with the FTA. The taxpayer may then carry the credit forward to offset future VAT liabilities or submit a formal request to refund the credit balance.

Before the amendment, the wording of Article 26 could be read as implying:

•  A standalone “refund claim” independent of the VAT account balance, or
• A direct entitlement to a cash refund once excess input tax arises

This might have caused interpretative ambiguity, especially in Audit discussion, FTA Disputes, Refund delays or rejections.

By referring expressly to “credit balance refund procedures,” the law now aligns with:

• The FTA’s VAT portal mechanics
• The VAT account ledger concept
• The actual administrative process followed by the FTA

Strengthened Framework for Data Disclosure (Article 28):

The revised Article 28 introduces a controlled, agreement-based framework for taxpayer data disclosure, significantly strengthening confidentiality, accountability, and governance, while aligning the UAE tax system with international standards for regulated information exchange.

Previously, Article 28 allowed the Federal Tax Authority (FTA) to disclose taxpayer information to other government entities based on broad statutory permission, with limited explicit conditions.

The revised Article 28 now conditions disclosure on the existence of a formal agreement, which must clearly define:

• Purpose and scope of data sharing
• Confidentiality and information security safeguards
• Controls over access, use, and further dissemination

This transforms disclosure from a discretionary administrative act into a governed, contractual, and accountable process.

Under the revised framework, taxpayer data cannot be freely shared between government entities unless there is a defined purpose, strong cyber security controls, data retention and deletion rules, data access controls as per the agreement.

Implications for Businesses:

• Although limited in scope, the amendments are operationally relevant. Businesses should consider:]
• Whether existing record retention policies adequately cover extended periods linked to refund claims
• How error identification and correction processes align with the revised voluntary disclosure thresholds
• The potential impact of extended audit timelines on documentation and internal controls
• Alignment of internal processes with the concept of credit balance refunds
• The robustness of data handling and confidentiality protocols in light of enhanced disclosure requirements

Cabinet Decision No. 17 of 2026 represents a measured refinement of the UAE tax procedures framework. The amendments focus on enhancing clarity, strengthening administrative control, and aligning the regulation with practical application.

While the changes are not extensive, they address areas that directly influence compliance management and interaction with the Federal Tax Authority. Early consideration of these updates will support more effective risk management and operational readiness