The UAE Federal Tax Authority (FTA) has recently updated the regulatory landscape with Cabinet Decision No. 17 of 2026, which amends several key provisions of the Executive Regulation of Federal Decree-Law No. 28 of 2022 on Tax Procedures. These amendments, effective from April 1, 2026, introduce critical changes to record-keeping, voluntary disclosures, and refund processes. Understanding these updates is essential for businesses and Taxable Persons to ensure continued compliance and avoid administrative penalties.
Extended Record-Keeping for Refund Applications
One of the most significant updates concerns the duration for which records must be maintained. While the standard retention period remains five years for most taxable persons, a new clause has been added to address ongoing refund processes.
- New Requirement: If a Taxable Person has a pending refund application for which the Authority has not yet issued a decision, they must now retain their books and records for an additional two years.
- Condition: This applies provided the application was submitted within five years from the end of the relevant Tax Period.
Updated Voluntary Disclosure Protocols
The procedures for correcting errors in Tax Returns or Assessments (Article 10) have been refined to clarify the obligations of Taxable Persons when they discover discrepancies.
Threshold-Based Reporting
The timeline for submission depends on the value of the error discovered:
- Errors > AED 10,000: The Taxable Person must submit a Voluntary Disclosure within 20 Business Days of becoming aware of the error.
- Errors ≤ AED 10,000: * The error can be corrected in the Tax Return for the period in which it was discovered or the next due return, whichever is earlier.
However, if there is no upcoming Tax Return available to make the correction, a Voluntary Disclosure must still be submitted within 20 Business Days.
Incorrect Refund Applications
If a Taxpayer realizes a refund application resulted in a higher refund than entitled, they must generally submit a Voluntary Disclosure within 20 Business Days. However, the law distinguishes based on the origin of that error:
- Standard Refund Error: If the error is independent of a Tax Return or Assessment, the 20-Business Day VD rule applies.
- Error Originating from a Return/Assessment: If the incorrect refund was actually the result of an incorrect Tax Return or Tax Assessment, then the threshold-based rules apply:
- Over AED 10,000: Submit a VD within 20 Business Days
- AED 10,000 or Less: Correct it via the next available Tax Return; otherwise, submit a VD within 20 Business Days.
Enhancements to Tax Audit Powers
The amendments grant the FTA broader authority during Tax Audits to ensure the integrity of the tax system.
- Extension of Seizure Periods: The Authority now has the explicit right to extend the period specified to seize documents or assets.
- Notification: While the Authority may extend these periods as necessary for the audit, they are required to notify the concerned person where possible.
Streamlined Credit Balance Refund Procedures
Article 26, which governs the refund of credit balances, has been amended to provide more structure to the FTA’s decision-making timeline.
- Decision Timeline: The FTA must decide on a refund application and notify the Taxpayer within 20 Business Days of submission.
- Repayment Process: Once a refund is approved, the Authority must initiate the repayment procedures within 5 Business Days of the notification.
- Unfiled Returns: A critical safeguard remains the Authority may defer the refund if the Taxpayer has outstanding Tax Returns that have not yet been submitted.
Information Disclosure and Confidentiality
The 2026 amendments also touch upon how the Authority handles data sharing with other government entities.
- Government Disclosure: Information can be disclosed to competent government entities as determined by the FTA Board, provided there is a formal agreement ensuring data protection and specifying the permitted use of the information.
Conclusion
The 2026 amendments strengthen the UAE tax framework by tightening compliance timelines, enhancing audit powers, and extending obligations in specific scenarios. While the changes are targeted, their impact is practical, requiring businesses to be more proactive, accurate, and prepared in managing their tax affairs.
Also Read: Tax Assessment Review | RVG
