The UAE operates a self-assessment tax regime. Taxpayers are responsible for calculating and declaring their tax liabilities in their tax returns.

Tax controversies typically arise where the Federal Tax Authority (FTA) disagrees with a person’s self-assessed tax position or otherwise issues a decision affecting a person’s tax obligations. Such controversies commonly arise from:

• Tax Assessment by the FTA under Article 23 of Federal Decree-Law No 28 of 2022 on Tax Procedures (“Tax Procedures Law”), determining the payable tax and refundable tax – these may be issued either directly based on information available to the FTA or after an audit is carried out in accordance with Chapter 3 of the Tax Procedures Law;
• Administrative Penalties Assessment under Article 24 of the UAE Tax Procedures Law; or
• other administrative decisions, such as rejection of refund applications or other determinations affecting the taxpayer’s tax position.

Withholding Tax is currently charged at 0% in the UAE as per Article 45 of Federal Decree-Law No 47 of 2022 (“Corporate Tax Law”), so no controversies arise with respect to such tax.

In addition, disputes may arise in connection with criminal proceedings for tax evasion or other acts listed under Article 25 of the Tax Procedures Law. Such proceedings may be initiated only upon a written request by the Director General of the FTA under Article 26 of the Tax Procedures Law. Before such initiation, there is the possibility of reconciliation by the FTA in terms of Article 27 of the Tax Procedures Law.

Tax controversies in the United Arab Emirates arise in connection with the federal taxes administered by the FTA, which currently include Corporate Tax, VAT and Excise Tax.

Until the end of 2024, tax controversies primarily arose in relation to VAT and Excise Tax, as these taxes were introduced in 2017, whereas Corporate Tax was introduced only in 2023. The first Corporate Tax return filing deadlines fell between 2025 and 2026, depending on each taxpayer’s financial year end, so no significant disputes under the Corporate Tax regime had emerged by the end of 2024.

Historically, VAT disputes have been the most common source of tax controversy, given the broad scope of the tax and the high volume of taxable transactions across most sectors of the economy. The scale of enforcement activity illustrates this. According to the FTA’s Annual Report (2024), the FTA conducted approximately 93,000 inspection visits across markets nationwide in 2024, detecting around 12,000 violations of VAT legislation.

By contrast, Excise Tax controversies have generally been more limited in number, as the tax applies only to a narrow category of goods, but such controversies tend to be concentrated in particular industries dealing with excisable goods, such as tobacco products, energy drinks and sweetened beverages. Disputes in this area typically arise from non-payment of Excise Tax or non-compliance with the Digital Tax Stamp regime. According to the FTA Annual Report (2024), the FTA issued 1,196 seizure and violation reports for untaxed excisable goods in 2024, and approximately 11 million packages of tobacco products were seized for lacking Digital Tax Stamps.

The greater complexity of the VAT regime – particularly in relation to input tax recovery, zero-rating, exemptions and the treatment of financial services and real estate transactions – also creates significantly more scope for interpretational disagreements between taxpayers and the FTA than the comparatively more targeted Excise Tax regime.

From the later part of 2025, significant Corporate Tax controversies have emerged, and the volume of disputes in this area is expected to grow significantly in the coming years for the following reasons, among others.

• The Corporate Tax legislative and administrative framework continues to evolve, with frequent updates to cabinet decisions, ministerial decisions and FTA guidance. In some cases, these updates apply retrospectively from the introduction of the Corporate Tax regime in June 2023, which may create differences between taxpayers’ original positions and later clarified interpretations.
• Certain secondary legislation and administrative guidance expressly contemplated by the Corporate Tax Law have yet to be issued. In their absence, taxpayers may adopt positions that could subsequently differ from the interpretation reflected in future legislation or guidance.
• The first few compliance cycles under the Corporate Tax regime are inherently prone to errors, as many businesses are applying Corporate Tax rules for the first time and adapting their accounting and reporting systems accordingly. The regime also remains relatively new, with limited administrative practice and jurisprudence, which may increase uncertainty in the interpretation of certain provisions.

• The Corporate Tax regime introduces transfer pricing obligations for the first time in the UAE, requiring related-party transactions to be conducted at arm’s length and supported by appropriate documentation. Transfer pricing is a technically complex and fact-sensitive area, and is expected to be a key focus of FTA audits going forward.
• The treatment of free zone entities, particularly the conditions required to qualify as a Qualifying Free Zone Person eligible for the 0% rate, involves detailed factual and legal analysis. Given the large number of businesses operating in UAE free zones, this area is also likely to generate disputes.

From a value perspective, Corporate Tax controversies could likely dwarf VAT and Excise Tax disputes over time and become the dominant source of high-value tax controversy in the UAE for several reasons, including the following:

• Corporate Tax is levied on profits rather than transactional value, and therefore would produce larger dispute amounts;
• the 9% rate on profits will generate larger absolute dispute values than the 5% VAT rate on supplies;
• the 15% Domestic Minimum Top-up Tax (DMTT) applicable to large multinational groups further increases the potential value of disputes; and
• transfer pricing disputes involving large multinational groups may involve substantial values.

The risk of tax controversies in the UAE can be mitigated through the following measures.

Seeking Specialist Tax Advice

Given the complexity and evolving nature of the UAE tax framework, businesses should seek advice from specialist tax advisers to ensure that they fully understand their tax liabilities and compliance obligations, and the implications of their transactions under the applicable tax legislation. Proactive engagement with specialists can assist businesses in identifying potential areas of tax risk, implementing appropriate compliance processes, and structuring transactions in a manner consistent with the requirements of the law. Early advice can also help taxpayers anticipate interpretational issues, document their positions appropriately, and address potential exposures before they crystallise into disputes with the FTA.

Ongoing Tax Oversight and Periodic Compliance Health Checks

Given the evolving nature of the UAE tax framework, businesses should maintain continuous oversight of their tax positions and compliance processes. In practice, this can be achieved through a combination of the following measures:

• establishing a dedicated in-house tax function responsible for monitoring legislative and regulatory developments;
• engaging external specialist tax advisers on a retainer basis to supplement internal capabilities and flag issues requiring attention; and
• subscribing to and actively monitoring FTA communication channels, including its website, public clarifications and EmaraTax notifications.

Alongside this ongoing oversight, businesses should conduct periodic tax health checks and internal compliance reviews of their VAT, Excise Tax and Corporate Tax positions. These more detailed reviews enable businesses to reassess existing positions, identify potential risks or errors, and ensure that their compliance approach remains aligned with current legislation and administrative guidance. Such health checks are particularly valuable around significant transactions, restructurings or changes in business structure, as they allow businesses to address potential issues proactively.

Private Clarifications

The FTA provides a formal mechanism through which taxpayers may request a private clarification on the application of tax legislation to their specific facts and circumstances. The FTA considers itself administratively bound by the position stated in the clarification with respect to the taxpayer who requested the clarification, provided the factual circumstances remain materially the same as those described in the request. This allows businesses to obtain authoritative guidance on their tax positions, address areas of legislative uncertainty, and ensure their compliance approach aligns with the FTA’s interpretation of the law, reducing the prospect of disputes arising from differing interpretations.

Advance Pricing Agreements (APAs)

For businesses with significant related-party transactions, the FTA’s APA programme (formally launched in December 2025) offers a voluntary mechanism to agree in advance the criteria for determining the arm’s length price of controlled transactions over a fixed period of three to five tax periods. Once in place, an APA is binding on both the taxpayer and the FTA, eliminating the risk of transfer pricing disputes and adjustments for the transactions and periods covered, provided the taxpayer complies with all terms and conditions of the agreement and the critical assumptions underlying it remain valid.

APAs can be unilateral, bilateral or multilateral. A unilateral APA is concluded between the taxpayer and the FTA alone, while bilateral and multilateral APAs also involve the competent authorities of one or more foreign jurisdictions, providing certainty across multiple jurisdictions and reducing the risk of double taxation.

The FTA is introducing the programme in phases. To be eligible, the controlled transactions proposed to be covered must generally meet a materiality threshold of AED100 million per tax period. Given that transfer pricing is expected to be a primary area of FTA scrutiny under the Corporate Tax regime, APAs represent a particularly valuable dispute prevention tool for large multinational groups operating in the UAE.

Voluntary Disclosure

Under Article 10 of the UAE Tax Procedures Law, taxpayers have both an obligation and an option to proactively correct errors or omissions in their tax positions by filing a Voluntary Disclosure with the FTA. A Voluntary Disclosure is mandatory where a taxpayer becomes aware that a previously submitted tax return, Tax Assessment or refund application contains an error that has resulted in an underpayment of tax or an overclaim of a refund. Conversely, where the error has resulted in an overpayment of tax or an underclaim of a refund, the taxpayer has the option to submit a Voluntary Disclosure to correct the position in their favour, but is not obliged to do so.

Filing a Voluntary Disclosure before the FTA initiates an audit is a significant mitigating measure for two reasons. First, it reduces the risk of a formal Tax Assessment being issued by the FTA, resulting in tax controversy. Second, administrative penalties applicable to errors corrected through a Voluntary Disclosure are lower than those that would apply if the same error were identified by the FTA during an audit. Taxpayers who proactively disclose errors therefore benefit from meaningfully reduced penalty exposure compared to those whose errors are discovered through FTA enforcement action.

Robust Documentation and Record-Keeping

Beyond complying with the statutory obligation to maintain adequate records and books, and specific transfer pricing documentations, businesses should maintain contemporaneous documentation and files supporting their key tax positions. This documentation should capture the factual, legal and technical analysis underlying positions taken in tax returns, the legislative basis relied upon, any guidance or clarifications considered, and the commercial context of the relevant transactions. This would serve a dual purpose:

• it would act as a proactive risk management tool, as the process of documenting the factual, legal and technical basis for a position requires a taxpayer to rigorously analyse and validate that position at the outset, reducing the likelihood of errors or unsupportable conclusions arising in the first place; and
• it strengthens the taxpayer’s position in the event of an FTA audit or dispute, by demonstrating that the taxpayer approached its obligations in good faith, applied reasonable judgement and reached a supportable conclusion based on the information available at the time.

The UAE’s tax landscape has undergone a fundamental transformation, driven substantially by the OECD/G20 BEPS framework. The UAE joined the Inclusive Framework in 2018 and has since implemented the four minimum standard Actions:

• countering harmful tax practices (Action 5);
• preventing treaty abuse (Action 6);
• transfer pricing documentation and CbCR (Action 13); and
• improving dispute resolution (Action 14), alongside several further BEPS-aligned measures.

The introduction of the Corporate Tax regime in June 2023 was itself partly a BEPS-driven response. The Corporate Tax Law incorporates interest deductibility limitations aligning with OECD BEPS Action 4, a comprehensive transfer pricing regime aligned with the OECD TP Guidelines (Actions 8–10), Economic Substance Regulations (Action 5), and a General Anti-Abuse Rule. The UAE has also signed and ratified the MLI, adopting the Principal Purpose Test and enhanced MAP provisions across its treaty network of over 140 agreements. Most recently, the UAE implemented a Domestic Minimum Top-up Tax effective from January 2025, aligned with the Pillar Two GloBE Rules.

While the EU’s Anti-Tax Avoidance Directives do not apply directly to the UAE, they have had material indirect impact, as EU member states’ CFC rules, interest limitation rules and hybrid mismatch provisions affect the viability of structures routed through EU jurisdictions into or via the UAE.

The net effect has been a significant increase in both the volume and complexity of tax controversies. This is an inevitable consequence of the UAE’s rapid transition from a virtually tax-free jurisdiction to one with a comprehensive Corporate Tax, transfer pricing and global minimum tax framework within approximately two years. Transfer pricing, free zone qualification, GAAR application and DMTT computation are all emerging as areas of significant dispute potential.

At the same time, certain measures are designed to reduce controversies over time. The Ministry of Finance issued MAP guidance in June 2025 and the FTA launched its APA programme in late 2025. As both the FTA and the taxpayer community mature within the new framework, these mechanisms are expected to gradually moderate the level of controversy.

Possibility of Additional Assessments

Article 19 of the Tax Procedures Law allows the FTA to conduct a subsequent tax audit on a matter that has already been audited where new information emerges that could affect the outcome of the earlier audit. Such subsequent audit may result in the issuance of an additional Tax Assessment under Article 23 of the Tax Procedures Law.

In addition, the Tax Procedures Law does not prevent the FTA from issuing an additional Tax Assessment under Article 23 based on new information that comes to its attention, even where a prior Tax Assessment has already been issued.

Both the additional tax audit and Tax Assessment must be carried out within the statutory limitation period prescribed under Article 46 of the Tax Procedures Law.

Payment Requirement for Contesting a Tax/Administrative Penalty Assessment

Once a Tax Assessment is notified, the taxpayer has the following options.

• File a Review Request under Article 28 of the Tax Procedures Law. If the taxpayer does not receive a favourable outcome in response to the Review Request, or if the FTA does not issue a decision within the statutory deadline, the taxpayer may subsequently file a Reconsideration Request under Article 29 of the Tax Procedures Law.
• Directly file a Reconsideration Request under Article 29 of the Tax Procedures Law, without first submitting a Review Request.

For the purpose of pursuing either of the above options, there is no requirement for the taxpayer to pay the assessed tax or administrative penalties. Nevertheless, taxpayers may elect to settle the assessed tax liabilities at this stage in order to prevent the continued accrual of administrative penalties calculated based on the period of delay in payment.

If the FTA issues an unfavourable decision in response to the Reconsideration Request, or fails to issue a decision within the statutory timeline, the taxpayer may file an objection before the Tax Disputes Resolution Committee (TDRC). For the objection to be accepted, the taxpayer is required to pay the full amount of the disputed tax, in accordance with Article 32 of the Tax Procedures Law.

If the taxpayer subsequently receives an unfavourable decision from the TDRC, the taxpayer may appeal the decision before the competent Federal Court. Such an appeal will be admitted only if, in addition to paying the entire tax liability, the taxpayer has either paid at least 50% of the administrative penalties determined by the TDRC/Court’s ruling, as the case may be, or provided a bank guarantee for that amount, as required under Article 36 of the Tax Procedures Law.

Enforcement

Where a taxpayer fails to settle amounts due, the FTA is empowered to recover unpaid tax and administrative penalties through enforcement measures. The enforcement process under Article 40 of the Tax Procedures Law follows a structured notification procedure. The FTA first issues a notice requiring the taxpayer to pay the outstanding amount within 20 business days. If the taxpayer fails to comply, the Director General issues a decision obligating the taxpayer to pay, which is notified within five business days. This decision of the Director General constitutes a writ of execution for the purpose of enforcement by the enforcement judge of the Federal Primary Court.

Upon obtaining enforcement, the FTA may apply to seize and execute against the taxpayer’s assets, including bank accounts, vehicles, stocks and bonds, commercial and industrial licences, and land and real estate. In practice, such enforcement applications are typically made within two to four weeks of the enforcement file being opened. Where the taxpayer’s assets are located in an emirate with its own local judicial system (such as Dubai or Abu Dhabi), the FTA may request the federal courts to issue instructions to the relevant local courts to support the enforcement process.

In addition, where the FTA considers that the payable tax may be at risk of being lost, the Director General may apply to the urgent matters judge of the Federal Primary Court for a precautionary attachment order over the taxpayer’s assets, which will remain frozen until lifted by a court order.

Tax and other amounts payable to the FTA take statutory priority over all other debts of the taxpayer, by operation of law.

Taxpayers may challenge enforcement actions before the enforcement judge. Under Articles 212 and 233 of the Civil Procedure Code (Federal Decree-Law No 42 of 2022), enforcement may only proceed on the basis of an executive document that establishes a right that is certain, quantified and due. The enforcement judge has the jurisdiction to assess whether the executive document is valid and enforceable, and may halt enforcement where procedural defects are identified. In Judgment No 1322 of 2024, the Federal Supreme Court further confirmed that taxpayers may raise substantive challenges to the underlying tax debt itself at the enforcement stage, not merely procedural objections.

Administrative and Criminal Consequences of Failure to Declare or Pay Tax

Separately from the substantive assessment and enforcement process, a taxpayer’s failure to declare or pay tax within the prescribed deadlines may give rise to administrative penalties and, in serious cases, criminal liability.

The administrative penalty regime is governed by the Tax Procedures Law read with Cabinet Decisions No 129 of 2025, No 108 of 2021, No 49 of 2021 and No 40 of 2017. Administrative penalties are attracted for procedural non-compliance, including penalties for failure to register for tax, failure to file tax returns within the prescribed deadline, failure to settle tax liabilities by the due date, and failure to maintain required records and documentation. Late payment penalties accrue on a time-geared basis, compounding the taxpayer’s exposure for each period of continued non-compliance. These administrative penalties are assessed by the FTA and notified to the taxpayer in an Administrative Penalty Assessment, which may be contested through the same dispute resolution framework as applicable for Tax Assessment.

On the criminal side, Article 25 of the Tax Procedures Law establishes criminal offences for:

• intentional tax evasion;
• deliberate understatement of revenue to avoid registration thresholds;
• intentional reduction of payable tax; and
• submission of false information or incorrect documents to the FTA, among other matters.

Criminal sanctions include fines and imprisonment.

The Tax Procedures Law provides a reconciliation mechanism at various stages of the criminal process. Prior to the initiation of criminal proceedings, the FTA may reconcile with the taxpayer upon full settlement of the payable tax, administrative penalties and other amounts, as specified. After initiation but before conviction, the Public Prosecution may offer reconciliation in exchange for payment of the full tax, penalties and an additional percentage of the evaded tax. Successful reconciliation terminates the criminal case and extinguishes all associated consequences.

The administrative penalty and criminal tracks operate independently of and in parallel with any substantive assessment dispute. Filing a Reconsideration Request or TDRC objection does not suspend the accrual of late payment penalties, nor does it prevent the FTA from referring the matter for criminal prosecution where the elements of an evasion offence are established.

The FTA does not publish a formal checklist for audit selection – it will determine which persons should be audited and with what regularity based on the risk to the public revenue. Based on practical experience and industry observation, the key indicators that may prompt FTA scrutiny include the following.

• Leads filed under the Raqeeb Programme: the FTA operates a whistle-blower scheme called “Raqeeb”, which invites the public (sometimes for monetary rewards) to report suspected tax evasion or non-compliance relating to Corporate Tax, VAT or Excise Tax. To be considered valid, these reports must be accompanied by concrete evidence; unsubstantiated tips are usually disregarded. The identity of the informant remains strictly confidential and is not shared with the accused party, nor during legal proceedings. In reality, these tips often come from disgruntled former employees who have inside knowledge, competitors who feel disadvantaged by a business evading taxes, or customers who notice incorrect tax charges on their receipts. Based on the FTA’s Annual report for 2024, 722 reports submitted via Raqeeb were investigated, with an FTA response rate of 100%.
• Industry audits: when a significant case of tax fraud is discovered in a specific sector, the FTA frequently widens the scope of its investigation (for example, the use of fake Digital Tax Stamps for tobacco-related products). A single violation can prompt a horizontal review of peer companies within the same industry. Some of the high-risk industries (automotive trading, trading of metal scraps, real estate development, construction and contracting, excise goods) attract particular scrutiny from the FTA.
• Patterns of refund claims: companies that consistently file tax returns showing a refund owed by the FTA may draw additional attention. Such patterns can prompt the FTA to verify the legitimacy of the underlying transactions to ensure the refunds are not the result of manipulated or incorrect filings.
• Submission of Voluntary Disclosures (VD): while filing a VD is the correct legal step, a business that consistently files disclosures for different tax periods or for recurring errors signals to the FTA that the company’s internal control systems may be weak or ineffective. If a VD is filed for Corporate Tax, the FTA may cross-verify the figures against previously filed VAT returns or customs declarations. A VD that corrects errors related to related-party transactions, transfer pricing or free zone qualifying income is more likely to attract attention. Since these areas are already high-risk, correcting them via VD prompts the FTA to verify that the underlying documentation actually supports the corrected figures.

The FTA is restricted from initiating a tax audit or issuing a Tax Assessment against a taxable person once five years have elapsed from the end of the relevant tax period.

However, there are specific exceptions to this five-year rule that extend the timeframe within which the FTA may act.

• The first exception applies when the taxpayer has been formally notified of the commencement of an audit before the five-year period expires. In such cases, the FTA is permitted to complete the audit or issue the assessment within four years from the date of that notification.
• The second exception concerns voluntary disclosures submitted during the fifth year following the end of the tax period. If a taxpayer files a voluntary disclosure in that final year, the FTA may complete the related audit or issue an assessment within one year from the date the disclosure was submitted.
• The third exception involves refund applications filed in the fifth year, for which the FTA has a two-year window from the submission date to complete an audit or issue an assessment.

A significantly longer limitation period of 15 years applies in cases involving tax evasion or failure to register. This extended period runs from the end of the tax period in which the tax evasion occurred, or from the date on which the person should have registered for Excise Tax if they failed to do so.

The duration of the tax audit is not established, but the FTA is obligated to communicate the results of the audit within ten business days from the end of the tax audit.

The FTA generally conducts tax audits either at its own offices or at the business premises of the person subject to the audit (the business premises extends beyond the main office to include any location where the person stores excise goods or maintains required records). When the audit takes place at the taxpayer’s place of business, it is typically carried out during the FTA’s normal working hours.

The FTA usually provides advance notice of an audit at least ten business days before it commences. However, this notification requirement is subject to exceptions: no prior notice will be given in cases involving suspected tax evasion, or where providing advance warning would impede the effectiveness or conduct of the audit.

During the audit process, the FTA is entitled to examine all records that a taxable person is legally required to maintain, and to assess the overall circumstances of the business. As part of this examination, the FTA may copy documents, take extracts from records, or sample any information or goods it deems necessary for the audit. Accordingly, audits may be conducted using either printed documents or electronically available data, depending on the nature of the taxpayer’s record-keeping practices. With the introduction of Electronic Invoicing requirements, the use of electronically available data is expected to increase.

During an audit, FTA officers may also interview relevant staff, such as finance personnel responsible for tax return calculations or logistics employees overseeing goods imports, to gain a clearer understanding of operations. In certain cases, the auditor may also remove documents, items or samples for further analysis off-site. To verify a taxpayer’s compliance, an FTA auditor may, subject to applicable rules, request original documents or copies, including from third parties, to assess the taxpayer’s tax position, and may also take physical samples of goods for testing or verification.

Any person subject to an audit is required to provide full co-operation and unrestricted access to records.

When the FTA initiates a tax audit, the process typically begins with a formal notification followed by an email request for specific documentation. The documents requested generally correspond to the type of tax under review, with the FTA seeking detailed records to verify compliance across VAT, Excise Tax and, increasingly, Corporate Tax.

For VAT purposes, the FTA commonly requests a breakdown of transactions by category for each tax period under review. This includes detailed disclosures of standard-rated sales, supplies subject to the reverse charge mechanism (particularly imported services), zero-rated sales and tax-exempt supplies. The Authority also typically seeks documentation regarding imports during the relevant period, along with explanations for any adjustments made to goods imported into the UAE. On the expense side, the FTA may request the disclosure of standard-rated expenses incurred during each period.

For Excise Tax purposes, audit requests tend to focus on physical inventory and goods movement. The FTA typically asks for movement records of excise goods, documentation related to stockpiling, and the calculations supporting the stockpiled positions. Taxpayers may also be required to disclose the types and categories of excise goods they deal in, to confirm proper classification and tax treatment. Another point of scrutiny is the use of Digital Tax Stamps, their correct implementation and their return, where necessary.

For Corporate Tax purposes, as the regime matures, the FTA is expected to request audited financial statements, audit balance sheets, and detailed reconciliations between the balance sheet and filed tax returns. These documents allow the authority to verify the accuracy of reported income, deductions and the overall tax base. Another point of attention is documents relating to controlled arrangements and transfer pricing documentations, and details on the adequate substance. This is of particular importance for taxpayers applying the 0% Corporate Tax rate under the Qualifying Free Zone Person regime.

As the audit progresses, the FTA frequently requests additional information to substantiate the tax treatment adopted by the taxpayer, and the timeframes for the provision of documents is limited.

The Corporate Tax framework in the UAE is relatively new, and cross-border exchanges of information on VAT or excise issues are normally rare. There is no publicly available information to suggest that the UAE authorities have engaged in joint audit procedures or collaborative examinations with foreign tax jurisdictions.

However, this landscape is expected to shift fundamentally following the issuance of Cabinet Resolution No (209) of 2025 on 31 December 2025. Under the new framework, the Ministry of Finance is expressly authorised to request and collect detailed information (including ownership and beneficial ownership data, banking records, accounting documents, and information on net assets) and to exchange such information with foreign competent authorities upon request, subject to applicable international treaties. This enhanced framework represents a significant advancement in the UAE’s tax transparency architecture, and one could expect the increase of cross-border exchanges of information for tax audit purposes.

The UAE participates in the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAC), under which tax authorities may co-operate through mechanisms including simultaneous tax examinations and tax examinations abroad. Accordingly, the Convention provides a basis for potential co-ordinated audit activity between the UAE FTA and tax administrations in other jurisdictions. However, as far as is known, there has not yet been any publicly reported instance of an FTA joint or simultaneous audit with a foreign tax authority.

Receiving notification of a tax audit from the FTA is the starting point of a tax audit, requiring an immediate and carefully considered response from the taxpayer within the required timeframes. At this stage, it is essential to engage experienced professionals who can guide the taxpayer through the process, provide strategic advice, and work to minimise potential tax exposures and penalty liabilities.

However, while skilled representation during an audit is invaluable, the most effective defence against adverse audit outcomes begins long before any notification arrives: conducting proactive pre-audit health checks represents the optimal strategy for mitigating risk. These internal reviews allow businesses to identify and correct errors, strengthen documentation practices, and ensure alignment with FTA requirements before the authority ever requests a file. By addressing vulnerabilities in advance, taxpayers can significantly reduce the likelihood of adjustments or penalties arising from a subsequent audit.

Once an audit is underway, it is advisable to refrain from making premature admissions of error, regardless of the initial assertions made by auditors, as such admissions may weaken the taxpayer’s position in any subsequent dispute resolution proceedings. The appropriate approach is to provide accurate information according to the request and maintain a co-operative approach throughout the process, while avoiding any conduct that could be construed as misleading the auditors or obstructing the audit process.

A taxpayer who wishes to challenge a Tax Assessment or Administrative Penalty Assessment issued by the FTA must follow a multi-stage dispute resolution process prescribed under the Tax Procedures Law. It has consistently been held by the Federal Supreme Court that the path laid out is to be followed; if not, the claim will be treated as inadmissible (Appeal No 199 of 2020).

Request for Review

A Request for Review of a Tax Assessment or Administrative Penalty Assessment may be submitted within 40 business days from the date the taxpayer is notified of the assessment. This deadline may be extended upon request if approved by the FTA.

A Request for Review is optional. Taxpayers may elect to bypass this stage and proceed directly to filing a Request for Reconsideration. However, once a Reconsideration Request is filed, the option to submit a Request for Review is no longer available. This mechanism was introduced in 2022 to allow an independent administrative review of assessments and penalties, separate from the auditors who conducted the original tax audit.

A Request for Review is limited in scope. The taxpayer may not introduce new information, documents or factual arguments that were not previously presented to the auditors during the audit process; the review may only be based on the information already available to the FTA. The grounds on which a Request for Review may be submitted are limited to the following:

• the FTA did not follow the correct procedures in conducting the audit or issuing the assessment; or
• the FTA made an error in determining the tax or administrative penalty amount based on the information and documents available during the audit.

Request for Reconsideration

A Request for Reconsideration may be filed within 40 business days from the date of notification of the Tax Assessment, the FTA’s decision on the Request for Review, or the expiry of the statutory period for issuing such decision. This deadline may be extended upon request if approved by the FTA.

Filing a Request for Reconsideration is a mandatory step for contesting a Tax Assessment or Penalty, and must be exhausted before the dispute can be escalated to the TDRC.

Unlike the Request for Review stage, the taxpayer may submit additional information, documentary evidence and legal arguments that were not previously provided during the audit process.

Objections to the TDRC

If the taxpayer receives an unfavourable decision on the Request for Reconsideration, or if the FTA fails to issue a decision within the statutory timeline, the taxpayer may file an objection before the TDRC.

The objection must be filed within 40 business days from the date the taxpayer is notified of the FTA’s reconsideration decision, or, where no decision is issued, within 40 business days from the expiry of the statutory period for issuing that decision. Failure to comply with this deadline will result in the rejection of the objection. However, the TDRC may, upon the request of the taxpayer, extend the deadline for filing the objection where the delay was caused by reasons beyond the taxpayer’s control, such as a sudden accident, emergency circumstances or force majeure.

The TDRC will also reject an objection where:

• the taxpayer did not first file a Request for Reconsideration with the FTA; or
• the taxpayer has not paid the full amount of the disputed tax.

TDRC decisions in disputes where the total value does not exceed AED100,000 are final and treated as executory instruments. In disputes exceeding AED100,000, the TDRC decision becomes an executory instrument if no appeal is filed before the competent Federal Court within 40 business days from notification of the decision.

Submitting an objection before the TDRC is a mandatory step before a dispute may be brought before the courts.

For both a Request for Review and a Request for Reconsideration, the FTA must issue a decision within 40 business days from the date of receipt of the request, which may be extended by up to 20 additional business days where necessary. In both cases, where the FTA fails to issue a decision within the prescribed statutory timeframe, the taxpayer may escalate the matter to the next stage of the dispute resolution process in accordance with the Tax Procedures Law.

The TDRC is likewise subject to a statutory deadline. It must issue a decision on an objection within 20 business days from the date of receipt, which may be extended by up to 60 additional business days where necessary. While Article 36(1)(b) of the Tax Procedures Law and Article 7 of Cabinet Decision No 12 of 2025 contemplate that a taxpayer may appeal to the competent court where no decision has been made by the TDRC on an objection already submitted, the Federal Supreme Court in Judgment No 388 of 2024 (issued on 14 May 2025) took a more restrictive view. The Court held that the TDRC’s function is governed by procedural rules similar to those applied by courts, that its decisions form the basis for subsequent judicial review, and that the statutory timeframes are to be understood in a procedural and organisational manner rather than as strict jurisdictional deadlines. Accordingly, the Court held that initiating an appeal prior to the issuance of a decision by the TDRC was premature. In practice, this creates uncertainty for taxpayers facing prolonged TDRC delays, as the statutory right to escalate in the absence of a decision may be of limited practical utility in light of this judicial interpretation.

Judicial tax litigation in the UAE is initiated by way of an appeal filed before the Federal Court of First Instance challenging a decision of the TDRC. A judicial claim cannot be initiated directly against a Tax Assessment, an Administrative Penalty Assessment or decisions issued by the FTA on Review or Reconsideration Requests, as the administrative dispute process must first be exhausted.

An appeal may be filed by either the taxpayer or the FTA where they are dissatisfied with the decision of the TDRC, provided that the value of the dispute exceeds AED100,000.

The Court may declare the appeal inadmissible in the following circumstances.

• Where the objection before the TDRC itself was inadmissible, for example because:
1. a Reconsideration Request was not first submitted to the FTA;
2. the full amount of the disputed tax was not paid; or
3. the objection was not filed within the statutory deadline.
• Where the taxpayer fails to provide proof of payment of the full amount of the disputed tax.
• Where the taxpayer fails to provide proof of payment of at least 50% of the administrative penalties determined pursuant to the TDRC’s decision (or to provide a bank guarantee for that amount), as required under the Tax Procedures Law.

Judicial tax litigation in the UAE is conducted in accordance with the Civil Procedure Law (Federal Decree-Law No 42 of 2022). Proceedings are conducted in Arabic, and all submissions and supporting documents must be filed in Arabic or accompanied by an official Arabic translation.

The principal stages of judicial tax litigation are as follows.

Filing of Appeal

The appellant, which can be either the taxpayer or the FTA, initiates the proceedings by filing an appeal. The appeal consists of a statement of claim setting out the grounds of appeal and supporting arguments, together with the relevant evidence. The filing is made through the court’s case management office.

Exchange of Submissions

The respondent is served papers and given the opportunity to submit a memorandum of defence responding to the appeal. The parties may subsequently exchange additional memoranda and supporting evidence.

Court Proceedings

Once the written submissions are completed, the matter is referred to the presiding judge. The court may either:

• reserve the case for judgment based on available submissions and evidences; or
• appoint a court expert to examine the technical aspects of the dispute.

Where an expert is appointed, the expert may review documents, hear statements from the parties, and conduct technical analysis before submitting a report to the court. The court retains full discretion to accept the expert’s findings in whole, in part or not at all.

Generally, there are no trial advocacy hearings in tax disputes.

Judgment

Following consideration of the submissions and any expert report, the court issues its judgment. The judgment of the Federal Court of First Instance may be appealed before the Federal Court of Appeal, and the decision of the latter before the Federal Supreme Court.

Tax disputes before the Federal Court of First Instance and the Court of Appeal typically take approximately four months, although proceedings may extend to around seven months where a court-appointed expert is involved. Proceedings before the Federal Supreme Court typically range from two to eight months, depending on the complexity of the case.

In UAE civil tax litigation, documentary evidence is the primary and most significant form of evidence, while witness evidence plays a limited role in practice.

Documentary Evidence

This is the primary and most crucial form of evidence in UAE tax litigation. There is no formal discovery or disclosure process in UAE court proceedings. Litigants are not obliged to submit all documents in their possession, whether favourable or detrimental to their case. Each party submits the evidence it chooses to rely on.

Documentary evidence is submitted at the pleadings stage, with the initial statement of claim or memorandum of defence, and through any subsequent exchange of memoranda. Where a party submits an exhibit at the first hearing that it could have submitted earlier, the court may admit such exhibit unless doing so would result in an adjournment of the case. If late submission causes adjournment, the court may issue a penalising order of not less than AED2,000 and not more than AED5,000 against the party causing the delay.

Witness Evidence

Witness testimonies are also permitted in civil judicial proceedings in the UAE, but witness evidence in tax-related proceedings is not common.

In the UAE, the allocation of the burden of proof differs between administrative, civil and criminal tax proceedings.

At the administrative level, under Article 51 of the Tax Procedures Law, the taxable person bears the burden of proving the accuracy of its tax return, while the burden of proof rests on the FTA in cases involving tax evasion.

In civil tax litigation before the courts, the general principle is that the burden of proof rests on the claimant, in accordance with the UAE Civil Procedure framework. However, in Appeal No 212 of 2023, the Federal Supreme Court recognised an important qualification: where a taxpayer advances a claim and the FTA is in exclusive possession of the documents necessary to verify that claim, the burden may shift to the FTA to produce such evidence. If the FTA fails to do so or does not provide a substantive rebuttal, the court may draw an adverse inference in favour of the taxpayer.

In criminal tax proceedings, including tax evasion cases, the burden of proof rests on the FTA (and the Public Prosecution) to establish the offence, in line with general criminal law principles.

Effective management of a tax dispute in the UAE requires careful strategic decision-making at each stage, as positions and choices made early in the process directly influence the options available at later stages. The following considerations are particularly relevant.

Cost-Benefit Analysis for Pursuing the Dispute

At the outset, taxpayers should assess whether it is commercially and strategically viable to pursue the dispute, as opposed to settling and closing the matter. This involves evaluating:

• the quantum of tax and penalties in dispute;
• the likelihood of success based on the legal and factual position;
• the costs of litigation; and
• the time and management resources required to pursue the dispute.

Early Payment of Assessed Tax

Although no payment is required at the Review or Reconsideration Request stages, late payment penalties continue to accrue on outstanding amounts throughout the dispute process. Early settlement of the assessed tax may therefore be considered to limit the compounding of penalties, even where the underlying liability is disputed.

Settlement of Dispute

Tax and administrative penalties may be settled at any stage, bringing the dispute to an end. In appropriate cases, taxpayers may also seek payment of administrative penalties in instalments, or apply for their waiver or refund, subject to the applicable conditions.

In cases involving tax evasion, the law provides multiple opportunities for reconciliation, including:

• with the FTA prior to the initiation of criminal proceedings by the FTA;
• with the Public Prosecution after the initiation of proceedings but before conviction; and
• with the Public Prosecution even after a conviction judgment is issued.

Such reconciliation is generally contingent on payment of the due tax, administrative penalties and, where applicable, additional prescribed amounts.

Building Record Early

UAE courts do not generally examine grounds or arguments that were not first raised before the TDRC. It is therefore essential to present all material factual and legal arguments from the Reconsideration stage onwards, supported by comprehensive documentary evidence.

However, once a case is properly accepted at the judicial stage, the administrative judiciary exercises full plenary jurisdiction. It may re-examine the facts and merits of the case and substitute its own judgment for that of the FTA, rather than remanding the matter.

Choice of Procedural Route

Where the challenge falls within the narrow scope of a Request for Review, that route may be appropriate, particularly in cases involving questions of interpretation, since the review is conducted by a team separate from the auditors and may therefore offer a fresh perspective. The same may be expected at the Reconsideration stage. That said, there is no express regulatory framework governing the separation of these stages, and some communication between the Review and Reconsideration teams may be expected, as noted in the expert commentary, though this is difficult to verify in practice. Where broader arguments or additional evidence are required, it may therefore be more efficient to proceed directly to a Reconsideration Request and avoid unnecessary delay.

Appointment of Experts

In technically complex disputes, taxpayers should consider requesting the appointment of a court expert if the court does not do so on its own initiative, particularly where they consider that independent technical input would be advantageous. The expert is empowered to review documents, hear submissions and prepare a report for the court’s consideration.

In practice, the expert stage is often determinative, and taxpayers should actively engage by:

• submitting structured technical explanations; and
• responding promptly to queries.

Where, in light of existing judicial practice, it appears likely that the Court of First Instance or the Court of Appeal would adopt a position adverse to the taxpayer by applying subordinate legislation that the taxpayer considers inconsistent with the primary legislation, it may be appropriate to request that the court refer the issue to the Federal Supreme Court for determination. Such a request may be particularly relevant where the dispute turns on the validity, constitutional limits or permissible scope of the subordinate legislation, rather than merely on its application to the facts of the case.

Domestic Jurisprudence

The UAE follows a civil law system and does not operate a doctrine of binding judicial precedent in the common law sense. However, judgments of the Federal Supreme Court carry significant authority and are followed by the lower federal courts and the TDRC. Consequently, the growing body of Federal Supreme Court rulings on tax matters is progressively shaping a substantive body of UAE tax jurisprudence.

However, the binding influence of Federal Supreme Court judgments is subject to an important qualification: it arises only where the Court has established a general legal principle on a particular tax technical or procedural matter. Where a Federal Supreme Court judgment in a specific tax appeal (even one favourable to the taxpayer) is confined to the particular facts of the case and does not establish a general principle, lower federal courts are not required to adopt the same findings.

While influential in practice, judgments of the lower courts and the TDRC do not possess inherent authority to bind other tax committees or courts. Their influence is limited to the following.

• The principle of res judicata, according to which a matter that has been finally adjudicated between specific parties cannot be relitigated between those same parties. However, this does not extend the reasoning of the judgment to other taxpayers or disputes.
• The provision of practical guidance on the judiciary’s or committee’s approach to specific issues.

Foreign Jurisprudence

Decisions of international and foreign courts, including those of the European Court of Justice, the European Court of Human Rights and courts of other jurisdictions, do not have binding authority before UAE courts. However, they may be referred to as persuasive or interpretative guidance, particularly in areas where domestic jurisprudence is limited. UAE courts have, in practice, drawn on principles developed in other civil law and Arab jurisdictions as an interpretative aid.

Regional and International Materials

The GCC Common VAT and Excise Tax Framework Agreements serve as an important reference point, as they harmonise tax policies across GCC member states and provide a foundation for interpreting and applying tax laws in the UAE.

OECD Guidelines function as an important interpretive resource and are likely to be relied upon by both taxpayers and the FTA in disputes involving the Transfer Pricing (TP) Rules, Double Tax Treaty (DTT) interpretation and the application of the Pillar Two rules.

The FTA’s TP Guide expressly states that it is the primary source of guidance for transfer pricing matters in the UAE, prevailing over international standards. However, it further provides that taxpayers are encouraged to refer to the OECD TP Guidelines for Multinational Enterprises and Tax Administrations where a particular aspect is not addressed in the TP Guide. The TP Guide is itself broadly aligned with the OECD TP Guidelines and references OECD reports. The OECD Model Tax Convention is also expressly referenced in the definitions section of the TP Guide.

The OECD Model Convention Commentary and BEPS reports may similarly be invoked in treaty interpretation disputes, particularly where the treaties follow the OECD Model Convention.

The UAE’s Pillar Two legislation is similarly aligned with the OECD GloBE Model Rules, the Commentary and the agreed Administrative Guidance, and expressly provides that the Ministry of Finance may issue further rules to ensure alignment with the objectives of the GloBE Rules.

Administrative Guidance

Administrative guidance issued by the FTA, including Public Clarifications, Guides, Bulletins, etc, constitutes an important source of interpretive guidance. While these instruments do not have the force of law and are not formally binding on the courts, they reflect the FTA’s administrative position on the application of the tax legislation, and are regularly cited by both taxpayers and the FTA in dispute proceedings. Given the nascent nature of the UAE’s tax regime, these administrative instruments play a particularly significant role in filling interpretive gaps in the legislation. The FTA claims that, unlike private clarifications (which are binding on a taxpayer) and directives (which are interpretive sources binding on both taxpayers and the FTA), public clarifications and guides are not binding. However, this position has yet to be tested, as explained in detail in the expert commentary.

Directives on Tax Transactions

FTA directives should be treated separately, and are binding on both the FTA and the taxpayer. The FTA’s policy further defines them as published decisions establishing the bases for the application or implementation of tax legislation on specific tax transactions, distinguishes them from public clarifications, and provides that they remain effective until replaced or until the relevant legislation is repealed or amended.

The UAE operates a dual onshore judicial system comprising federal courts and local emirate courts. For tax disputes, however, the Tax Procedures Law directs judicial review to the federal courts, defining the “competent court” as the federal court within whose jurisdiction the FTA’s headquarters or branch is located. Judicial tax litigation is governed principally by the Civil Procedure Code (CPC), with Evidence Law No 35/2022 also relevant where evidentiary issues arise. Federal Judicial Authority Law No 32/2022 and Supreme Federal Court Law No 33/2022 are part of the institutional framework of the federal judiciary rather than the primary procedural code for tax disputes.

A judgment may ordinarily be appealed once to the Court of Appeal and, if the value exceeds AED500,000 or the claim is of indeterminate value, may be challenged a further time by cassation before the Federal Supreme Court (CPC, Articles 175(1) and 159(2)). Further rounds are not generally available against the same unchanged judgment. However, if the cassation court overturns and remands, the new judgment on remand may itself be appealed. CPC Article 186 expressly recognises the possibility of a challenge being filed “for the second time”, in which case the cassation court will decide the matter rather than remanding again.

Under Article 87 of the Law of Evidence, final judgments, litigation-ending decisions and payment orders carry res judicata effect and therefore preclude re-litigation of the same dispute between the same parties acting in the same capacities and in respect of the same right, object and cause. That finality is reinforced by Article 94 of the CPC, which permits a res judicata plea to be raised at any stage and requires the court to address it of its own motion, and by Articles 175(1)(d) and 175(2), which treat inconsistency with an earlier final judgment as a ground for cassation.

That said, there is a narrow set of exceptional mechanisms by which a matter that has already been finally adjudicated may be reopened. The principal route is a motion for reconsideration under CPC Article 171, which is available only against final judgments and rulings, and only in the following exhaustively listed cases:

• fraud by the opposing party affecting the judgment;
• reliance on documents later acknowledged or found to be forged, or on testimony later shown to be perjured;
• discovery after judgment of decisive documents withheld by the opposing party;
• relief awarded beyond or outside the parties’ claims;
• a self-contradictory operative part of the judgment;
• prejudice to a non-party who neither intervened nor was impleaded, provided fraud, collusion or gross negligence of the representative is proved; or
• a judgment rendered against a natural or legal person not duly represented in the proceedings.

The reconsideration motion should be filed before the same court that rendered the judgment, pursuant to Article 173, and Article 174(3) makes it clear that there is no second motion for reconsideration against the judgment dismissing that motion nor against the merits judgment rendered after the motion is accepted.

The CPC also preserves a still narrower possibility of reopening even at the cassation stage. Under Article 189, cassation judgments are generally not challengeable, save that judgments rendered on the merits of the dispute may themselves be attacked by way of reconsideration, but only on the limited grounds in Article 171(1)–(3) – namely fraud, forged documents or perjured testimony, or decisive documents later brought to light. In addition, Article 190 allows the Federal Supreme Court, either of its own motion or on the application of the party against whom the decision was rendered, to revoke a chambers decision or final judgment where:

• it is tainted by a procedural error of the court or its auxiliaries affecting the outcome;
• it is based on a repealed law and the correct law would have altered the result; or
• it departs from binding judicial principles without the required referral.

This revocation mechanism is itself tightly confined: it must be brought before the competent cassation court, with a substantial security deposit, and may be used only once and within one year of the chambers decision or final judgment.

Accordingly, while a final judgment on a Tax Assessment will ordinarily bar any fresh ordinary action concerning that same assessment, there is rare reopening in cases of fraud, forgery, perjury, concealed decisive documents, serious representation defects, ultra petita relief, self-contradictory operative wording, or certain exceptional defects in cassation judgments. Outside those narrow statutory avenues, however, finality prevails and the same assessment cannot simply be litigated anew because a party wishes to advance additional arguments or evidence belatedly.

The tax appeal process in the UAE is a structured legal pathway designed to resolve disputes between taxpayers and the FTA. The key stages are as follows:.

Federal Primal Court (Court of First Instance)

If the disputed amount exceeds AED100,000 and one of the parties disagrees with the TDRC decision, the case may be referred to court. Both the taxpayer and the FTA have the right to file a lawsuit within 40 working days from the date of notification of the TDRC decision. The court of first instance examines the case on its merits, but only within the scope of the claims and arguments that were raised at the TDRC stage; the Supreme Court has clarified that new grounds for the dispute cannot be raised for the first time directly in court, bypassing the TDRC. Subject to compliance with all procedural conditions, the court of first instance issues a ruling that may address both factual and legal aspects of the dispute.

To file an appeal with the court, it is also necessary to confirm that the tax has been fully paid, and that at least half of the assessed administrative fines have been paid (a bank guarantee in favour of the FTA must be provided for the remaining fines). Failure to submit documents proving the payment of the tax or 50% of the fines results in the court declaring such an appeal inadmissible. Thus, the taxpayer must fulfil the tax payment requirement in advance, and only then dispute the assessment.

The court of first instance is the full merits forum, in which the parties ordinarily develop the factual record, submit evidence, and formulate their claims and defences.

Court of Appeal

If a party is dissatisfied with the ruling from the court of first instance, they may escalate the matter to the Court of Appeal within 30 days. The Court of Appeal remains a broad merits-review court rather than a purely supervisory tribunal. Under Article 167(4) of the CPC, it may consider new evidence, pleas and defences in addition to the material submitted below. However, its jurisdiction is not unlimited. It may not admit a new claim on appeal (Article 167(5) CPC), and it may not ordinarily add a new party who was not involved in the underlying proceedings (Article 167(6) CPC), although the reason for the original claim may be changed and ancillary additions may be made while preserving the original claim.

Court of Appeal judgments are, as a rule, final under Article 159(2) of the CPC and may not be challenged by cassation if the value of the proceedings does not exceed AED500,000; only disputes above that threshold, or claims of indeterminate value, may proceed to cassation under Article 175(1) of the CPC.

Federal Supreme Court

As the highest judicial authority, the Federal Supreme Court represents the final tier of appeal. Its cassation review is triggered by challenges to decisions made by the Court of Appeal. The cassation complaint (the challenge) should be made within 30 days. The Supreme Court’s decision is final and is enforceable immediately after it is issued.

The cassation review is materially narrower, being confined to the statutory grounds listed in Article 175 of the CPC (violation of law or error in its application or interpretation; nullity in the judgment, decision or procedure affecting it; breach of jurisdictional rules; inconsistency with an earlier res judicata judgment or decision between the same parties on the same subject matter; absence, insufficiency or ambiguity of reasons; or a ruling on matters not claimed, or awarding more than was claimed), and does not operate as a second full appeal on fact and merits. In addition, Article 180 of the CPC bars the petitioner from raising cassation grounds that were not included in the statement of challenge, save for matters of public order.

The Federal Judicial Council, chaired by the Minister of Justice, has the statutory function of considering the appointment of judges (Federal Judicial Authority Law, Articles 5 and 6). Judges are appointed by federal decree subject to the approval of the Council (Article 42), and the Ministry of Justice assumes matters related to the appointment, promotion and allowances of judges (Article 96). With respect to the Supreme Federal Court, the chief justice, judges and alternate judges are appointed by federal decree after the approval and ratification of the Federal Supreme Council (Supreme Federal Court Law, Article 5).

The composition of the panel is as follows.

• Federal Primary Court: at this initial court level, cases are heard by a single judge within the Tax Disputes Circuit of the Federal Primary Court, who is responsible for evaluating the presented evidence and arguments.
• Court of Appeal: upon appeal, the case is brought before the Tax Disputes Circuit of the Federal Court of Appeal, where a panel of three judges conducts a comprehensive review of the lower court’s decision.
• The Federal Supreme Court hears challenges to appeal judgments through its designated departments. For cassation matters, judgments are generally issued by a panel of three judges.

In addition to the standard dispute resolution pathway, UAE tax legislation provides for several alternative mechanisms that allow taxpayers to resolve certain aspects of tax disputes outside of formal litigation. These mechanisms are administrative in nature and do not constitute mediation or arbitration in the conventional sense. The available mechanisms are as follows.

• Applications for administrative penalty waivers allow taxpayers to seek full or partial relief from administrative penalties imposed by the Federal Tax Authority. Such applications are decided by a dedicated committee within the Authority.
• Applications for settling administrative penalties by way of instalment plans provide taxpayers with the option to discharge unsettled administrative penalties over time rather than in a single payment, subject to meeting prescribed eligibility criteria.
• Reconciliation in criminal tax matters offers a pathway for resolving criminal tax accusations, whether before or after the initiation of formal criminal proceedings, and even after convicting verdict, through settlement of the outstanding tax liabilities, administrative penalties and, depending on the stage of the proceedings, additional statutory amounts.

These mechanisms are limited in scope. They address administrative and criminal penalties, but do not extend to the underlying tax liabilities assessed by the FTA, which are not subject to waiver, reduction or settlement by instalment.

Private clarification requests, while not strictly a dispute resolution mechanism, serve as a preventative tool by allowing taxpayers to obtain the FTA’s view on specific tax issues in advance, thereby reducing the likelihood of disputes arising.

Finally, the APA programme introduced under the Corporate Tax regime, as described in 8.4 Unilateral/Bilateral Advance Pricing Agreements, provides a further avenue for achieving advance certainty on transfer pricing matters and preventing disputes from arising in that context.

Each of the available ADR mechanisms operates through a distinct process and involves different decision-making bodies within the FTA or the Public Prosecution.

Applications for administrative penalty waivers and instalment arrangements are submitted electronically to the FTA and decided by a dedicated committee within the Authority, comprising the chair of the board of directors or their deputy and two board members. Under the applicable legislation, the committee exercises discretion in deciding whether to grant a waiver or approve an instalment arrangement.

Reconciliation is permitted in tax criminal matters. Its availability, competent authority and financial terms depend on both the type of offence and the procedural stage reached. Before a criminal case is initiated, the FTA may reconcile in tax evasion cases and in cases of deliberate failure to settle administrative penalties in return for full settlement of the Payable Tax and Administrative Penalties. For the separate offences listed in Article 25(4), pre-case reconciliation is available upon the payment of AED50,000 for each offence (instead of AED1 million).

Once criminal proceedings have been initiated, the power to reconcile passes to the Public Prosecution, after seeking the FTA’s opinion: before conviction, reconciliation in tax evasion cases and deliberate non-payment of administrative penalties requires full settlement of the payable tax and administrative penalties plus 50% of the evaded Tax, while Article 25(4) offences require AED100,000 per offence. After conviction, the additional amount rises to 75% of the evaded tax, or AED200,000 per Article 25(4) offence. The statutory pattern is therefore that reconciliation becomes progressively more onerous as the criminal process advances.

Private clarification requests are submitted directly to the FTA by the taxpayer, setting out the specific facts and circumstances and the taxpayer’s own view on the applicable tax treatment. The Authority then issues its position, which, while not legally binding, is stated to be administratively binding on the Authority if the material facts remain as described.

Although the UAE has a general mediation and conciliation regime for civil and commercial disputes capable of settlement, disputes with the FTA over Tax Assessments, administrative penalties and related tax liabilities are governed exclusively by the Tax Procedures Law and are not, in principle, matters to be resolved under the general mediation or conciliation framework.

The nearest equivalent is reconciliation in criminal tax matters. Its effect is not to reduce the underlying Tax Assessment itself: full settlement of the payable tax and administrative penalties continues to be required, and reconciliation instead operates by avoiding or extinguishing criminal exposure in return for payment of the statutory reconciliation consideration, the amount of which increases as the criminal process advances.

UAE tax legislation does not currently provide for legally binding advance rulings. However, two mechanisms exist that offer a degree of advance certainty to taxpayers.

• The private clarification mechanism allows taxpayers to submit a request to the FTA setting out a specific set of facts and circumstances and seeking the Authority’s view on the applicable tax treatment. The Authority’s response is issued in the form of an official document bearing its stamp and the signature of the Director General. While not legally binding, the Authority has stated that it considers itself administratively bound by the position set out in the clarification, provided the material facts and circumstances remain as described. Each clarification document contains an express disclaimer to this effect. Private clarification requests are subject to an administrative fee of AED1,500 for a clarification relating to a single tax, and AED2,250 for a clarification covering multiple taxes.
• The APA programme, described in detail in 8.4 Unilateral/Bilateral Advance Pricing Agreements, offers a more structured form of advance certainty in the transfer pricing context specifically. Unlike private clarifications, APAs are formal agreements between the FTA and the taxpayer, and provide binding certainty on the agreed transfer pricing criteria for a period of three to five tax periods, subject to the critical assumptions underlying the agreement remaining unchanged.

There are no further particulars concerning tax ADR mechanisms.

The APA programme introduced under the Corporate Tax regime represents the primary ADR mechanism available in the transfer pricing context. As described in 8.4 Unilateral/Bilateral Advance Pricing Agreements, the programme currently provides for unilateral APAs, with bilateral and multilateral APAs for cross-border transactions expected to become available during 2026. The APA programme offers taxpayers a structured mechanism for achieving advance certainty on transfer pricing matters and is therefore directly relevant to the prevention of transfer pricing disputes.

Outside of the APA framework, the general ADR mechanisms described in this section do not extend to transfer pricing adjustments, nor to cases involving the indirect determination of tax liabilities. Administrative penalty waivers and instalment arrangements address only the penalty element of a dispute, while reconciliation in criminal matters is limited to tax crime proceedings. None of these mechanisms provides a basis for challenging or settling the underlying transfer pricing assessment itself.

Given the nascent stage of the Corporate Tax regime and the absence of concluded transfer pricing disputes to date, the practical use of ADR in this context remains untested at the time of writing.

UAE law distinguishes between administrative tax violations and tax crimes, and the two do not necessarily coincide. Some conduct may attract only an administrative penalty, while other conduct may fall only within the catalogue of criminal tax offences. Equally, there are cases in which the same underlying facts may engage both regimes. In that overlap, the key differentiator is the presence of the criminal elements of the offence, in particular intentional conduct:

• if the facts support the administrative violation but criminal intent is not established, only the administrative penalty should apply; and
• if the same conduct also satisfies the statutory elements of a tax crime, criminal liability may arise as well.

The criminal case in respect of tax crimes may be commenced upon a written request by the Director General of the FTA.

Although UAE tax legislation distinguishes conceptually between Tax Assessments, administrative tax violations and tax crimes, those categories are not necessarily mutually exclusive, nor does the existence of one file automatically require the suspension of another.

Administrative violations do not in themselves amount to criminal offences, as criminal liability depends on establishing the constituent elements of the offence, including the requisite mental element. Equally, the relationship between the different tracks is not entirely symmetrical: a criminal penalty may arise without a corresponding administrative penalty where the relevant conduct is criminalised under the tax legislation but is not separately included within the catalogue of administrative violations.

Administrative penalties linked to underpaid tax, by contrast, are typically connected to the underlying Tax Assessment, since both depend on the existence and quantification of the tax shortfall. That said, an administrative penalty need not invariably depend on an assessment formally issued by the FTA, because where the taxpayer voluntarily discloses and corrects an error, the adjustment to the tax position may already have been made by the taxpayer, while the administrative penalty may still follow. In the absence of a general rule of mandatory suspension, it is therefore possible in principle for the judicial dispute concerning the Tax Assessment, administrative penalty proceedings and criminal proceedings to run in parallel.

The decision by the FTA either to pursue an administrative infringement process (typically through the issuance of an Administrative Penalties Assessment) or to initiate a criminal tax case generally hinges on the nature and seriousness of the alleged non-compliance or offence. In most instances, the FTA initiates administrative proceedings upon detecting violations of tax laws or regulations. Where there is evidence of a tax crime, the FTA may initiate criminal proceedings – for example, where during the VAT audit the FTA establishes the evidence of the artificial separation of business activities to avoid the VAT mandatory registration thresholds.

The practice is limited to date and mainly covers VAT and excise issues. The transition from a simple Tax Assessment to a criminal investigation usually takes place if there is evidence of fraudulent behaviour.

For taxpayers, it is important to note that an initial Tax Assessment may be escalated to a criminal case if the investigation uncovers evidence of intentional misconduct. Accordingly, maintaining accurate records and upholding transparent tax compliance procedures, including defence files on sensible tax issues, are key steps in minimising the risk of exposure to criminal tax charges.

For tax violations, the process generally begins with the issuance of a Tax and Penalty Assessment by the FTA. Taxpayers who receive such penalties have several options for resolution, including:

• in case of disagreement with the results – pursuing dispute resolution mechanisms, which may range from submitting a Request for Reconsideration to bringing complaints before the competent courts;
• applying for a waiver of administrative penalties where there are exceptional circumstances for the failure to comply with the applicable tax provisions; and
• requesting to pay administrative penalties through instalment plans where the amount of penalties is not less than AED50,000 and the penalties are not disputed in front of the TDRC or Federal Courts (excluding the reconsideration process).

For tax crimes, the process begins with a written request by the Director General of the FTA, as required by Article 26 of the Tax Procedures Law. The case then proceeds through the ordinary criminal process, including investigation by the competent prosecutorial authorities and, where pursued, adjudication before the criminal courts.

Prior to the initiation of a criminal case, the FTA may reconcile in tax evasion cases and in cases of deliberate failure to settle administrative penalties in return for full settlement of the payable tax and administrative penalties. At that stage, the process is initiated by the person concerned: a reconciliation application must be submitted to the FTA, using the prescribed form available through EmaraTax, before the criminal case is commenced, and the application must include the applicant’s undertaking to settle the full amounts due as consideration for reconciliation. The FTA may then accept or reject the application. The legislation does not, however, require the FTA to give a separate formal notice that criminal referral is under consideration. Accordingly, until the Director General submits the written request required to initiate the criminal case, the taxpayer may in principle apply proactively to the FTA for reconciliation.

Upfront payment of an additional Tax Assessment does not, by itself, entitle the taxpayer to any general reduction of the administrative or criminal penalties that may arise from the corresponding tax offence. In the UAE, relief from penalties must come through specific statutory or policy mechanisms rather than from early payment alone: administrative penalties may be waived, refunded or paid by instalments only under the dedicated penalty relief, while criminal exposure may be resolved only through the separate reconciliation framework.

Separately, the FTA may announce targeted compliance initiatives for particular violations from time to time. For example, the FTA has stated that the late Corporate Tax registration penalty may be waived where the taxpayer files its first Corporate Tax return within seven months from the end of its first tax period. Those initiatives are specific incentives and should not be understood as establishing a general rule that prompt payment of an additional assessment reduces penalties across the board.

Reconciliation is available in UAE tax criminal matters, both before and after the initiation of criminal proceedings, and may therefore be used to prevent the commencement of a criminal tax case or to bring an existing one to an end. Its availability depends on the type of tax offence and the procedural stage reached, with different competent authorities and financial conditions applying before referral, after initiation of proceedings and after conviction. See 6.2 Settlement of Tax Disputes by Means of ADR for details.

In federal criminal tax matters, a first-instance conviction or acquittal is ordinarily challengeable by appeal to the Court of Appeal under Article 230 of the Criminal Procedure Law. The defendant and the Public Prosecution may appeal within 15 days (Article 234(1)), while the Attorney General has 30 days (Article 234(4)). If the judgment was rendered in absentia in a misdemeanour or infraction case, opposition before the same court is available within seven days of notification and results in a rehearing ab initio as against the opposing party (Article 239). Appellate review is broad and permits the reconsideration of evidence and witnesses.

A further challenge lies by way of cassation against the final appellate judgment on the limited grounds set out in Article 244, with a 30-day filing period under Article 245. If the Court of Cassation (Supreme Federal Court) admits the challenge, it may either decide the merits itself in some cases or overturn and remand. If the cassation challenge is filed for the second time, the court may adjudicate the matter itself (Article 249(2)).

In addition to the ordinary appeal and cassation routes, there is an exceptional reconsideration mechanism for final criminal judgments. This is not a further ordinary appeal, but a narrowly confined post-final remedy available only in the specific circumstances set out in Article 257, such as later-discovered innocence, contradictory convictions, perjury, forgery or the subsequent overturning of a predicate civil or personal-status judgment.

As the Corporate Tax regime is relatively new, no specific information is available on this point.

Where a double taxation situation arises from a Tax Assessment or adjustment issued by the FTA, the standard domestic dispute resolution process remains the principal and currently the most tested avenue available to taxpayers. Given that Corporate Tax audit activity is only beginning to emerge following the filing of the first Corporate Tax returns in early 2025, no cross-border double taxation disputes have yet reached the courts at the time of writing.

The Mutual Agreement Procedure (MAP) is available under the vast majority of the UAE’s DTTs as a parallel or complementary mechanism for resolving cross-border double taxation disputes. The UAE Ministry of Finance acts as the competent authority for MAP purposes. Reflecting the UAE’s commitment to the BEPS Action 14 minimum standard as a member of the Inclusive Framework, the Ministry of Finance has issued dedicated MAP guidance, setting out the conditions for requesting a MAP, the applicable timelines, the legal basis, and the framework for resolving and implementing MAP cases. This guidance represents a meaningful step towards making MAP practically accessible to taxpayers.

Notwithstanding the existence of this framework, no publicly known MAP cases arising specifically from UAE CT assessments have been reported to date. This is consistent with the nascent stage of the Corporate Tax regime and the absence, so far, of cross-border disputes relating to transfer pricing, permanent establishment, residency determinations or other matters that have advanced to the point of triggering treaty-based relief.

The UAE signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) on 27 June 2018 and has subsequently ratified it. Through the MLI, the UAE has implemented updated MAP provisions aligned with the BEPS Action 14 minimum standard across its covered tax agreements, including standardised access to MAP, a commitment to good-faith resolution, and enhanced procedural timelines. The UAE also adopted the Principal Purpose Test and updated DTT preambles in line with BEPS Action 6.

Notably, while the UAE did not opt into Part VI of the MLI, some of the UAE’s DTTs nevertheless provide for arbitration as a mechanism to resolve issues that remain unresolved through MAP. In such cases, where the UAE Competent Authority (Ministry of Finance) is unable to reach agreement with the Competent Authority of the other contracting state within the timeframe specified in the MAP article of the relevant DTT, and no decision has been issued by a court or tribunal in either state, the unresolved issues may be referred to arbitration. Depending on the relevant DTT, arbitration may be voluntary or mandatory, and the request may be made either by a Competent Authority or by the taxpayer that submitted the MAP claim. For example, Article 24(5) of the UAE–Netherlands DTT contains a mandatory arbitration provision.

The EU Tax Disputes Directive has no application in this jurisdiction, as the UAE is not an EU member state.

In practice, as Corporate Tax-related cross-border disputes begin to emerge, taxpayers (particularly multinational enterprises,) are expected to consider MAP as a complementary avenue to domestic litigation rather than a mutually exclusive alternative. The choice between pathways will depend on the nature of the adjustment, the identity of the counterpart jurisdiction, and the provisions of the applicable DTT.

The UAE Corporate Tax Law incorporates a General Anti-Abuse Rule (GAAR) under Article 50, empowering the FTA to disregard or recharacterise any transaction or arrangement, or series thereof, that when assessed objectively was entered into primarily to obtain a Corporate Tax advantage inconsistent with the intent and purpose of the law and which lacks genuine commercial substance. This provision applies broadly and is not restricted to domestic situations: cross-border arrangements structured to access DTT benefits, reduce withholding tax or shift profits away from the UAE fall squarely within its potential scope.

Alongside the GAAR, the Corporate Tax Law contains a number of Specific Anti-Avoidance Rules (SAARs) embedded in substantive provisions, including limitations on interest deductibility and transfer pricing adjustments, each targeting identifiable forms of base erosion and profit shifting.

The application of the domestic GAAR to arrangements covered by bilateral DTTs raises the question of whether domestic anti-abuse rules may override treaty-conferred benefits. This is a legally complex question, particularly given the absence of an established UAE judicial tradition on treaty interpretation. As the Corporate Tax regime remains at an early stage, no court decisions specifically addressing the interaction between the Article 50 GAAR and DTT entitlements have been issued to date.

Through its ratification of the MLI, the UAE has introduced the Principal Purpose Test (PPT) into a significant number of its covered DTTs. The PPT operates as a treaty-level anti-abuse provision, enabling the denial of a treaty benefit where it is reasonable to conclude that one of the principal purposes of an arrangement was to obtain that benefit, unless granting the benefit would be consistent with the object and purpose of the relevant treaty provision. Importantly, the UAE adopted the PPT with the option to refer to the competent authority for a final assessment of treaty benefit availability, providing a degree of procedural protection for taxpayers whose arrangements may be challenged.

As yet, no UAE court decision has interpreted the PPT in the context of a specific cross-border dispute. However, as Corporate Tax activity develops and the FTA gains experience with cross-border audits, the PPT could become a significant area of contention, particularly for multinational groups holding regional hub structures or intellectual property arrangements in the UAE. Taxpayers will need to ensure that their structures are supported by genuine commercial substance and economic rationale, as technical availability of treaty benefits alone will not constitute a sufficient defence.

Transfer pricing disputes in the UAE are, in principle, addressed first through the domestic tax dispute route – namely, review of the FTA’s assessment, Reconsideration Request, objection to the TDRC and appeal against the FTA’s assessment. However, there is not yet a developed public track record of transfer pricing adjustments having progressed to judicial precedent, given the recency of the Corporate Tax regime. Where a transfer pricing adjustment results in taxation not in accordance with an applicable DTT, treaty-based relief may also be sought through the MAP, and the UAE Ministry of Finance’s MAP Guidance expressly contemplates MAP claims for transfer pricing adjustments and related double taxation scenarios. By contrast, the EU transfer pricing dispute resolution directive is not applicable in the UAE, and there is no separate UAE-specific multilateral transfer pricing convention route distinct from the domestic and treaty mechanisms.

Advance pricing agreements (APAs) are now available in the UAE, but they are too recent to be described as a common mechanism in practice. The FTA issued its APA Guide (CTGAPA1) on 31 December 2025, and separately announced service fees for applications for a unilateral APA and for renewal or amendment of a unilateral APA from 1 January 2026, which indicates that the UAE has moved from framework to implementation only recently.

At this stage, the most practical route is the unilateral APA. Bilateral and multilateral APAs are contemplated through the treaty-based mutual agreement process, but there is not yet a developed public record of their use in the UAE.

The procedure broadly comprises four stages:

• a pre-filing consultation;
• formal filing of the APA application;
• evaluation and negotiation with the FTA; and
• conclusion and implementation of the APA, followed by ongoing compliance for the covered periods.

In that sense, APAs should be viewed as an emerging preventative tool for transfer pricing certainty rather than an established, high-volume alternative to litigation.

Given the early stage of the UAE Corporate Tax regime, there is not yet a developed public body of cross-border tax litigation, but the areas most likely to generate disputes are broader than transfer pricing and permanent establishment alone. In practice, the main pressure points are likely to include:

• transfer pricing, including not only upward adjustments but also downward ones, as these may be contested in the UAE where they affect the availability of the 0% free zone regime;
• permanent establishment and profit attribution issues;
• residence and place-of-effective-management questions for companies and, in treaty contexts, tax residency certification for individuals and corporates;
• the classification of foreign transparent or flow-through structures and the availability of foreign tax credits or deductions; and
• the application of “subject to tax” conditions under the Participation Exemption or Foreign Permanent Establishment Exemption, which may require analysis of whether the foreign jurisdiction imposes a tax sufficiently similar to UAE Corporate Tax.

These areas should be mitigated over time by clearer administrative guidance, more consistent audit practice, effective treaty-based MAP, broader use of bilateral and multilateral APAs, and more predictable administrative practice around tax residency certificates and cross-border classification issues.

This is not applicable in this jurisdiction.

This is not applicable in this jurisdiction.

This is not applicable in this jurisdiction.

This is not applicable in this jurisdiction.

As noted in 8.1 Mechanisms to Deal With Double Taxation, the UAE signed and ratified the MLI but did not opt into Part VI, which provides for mandatory binding arbitration as a last-resort mechanism where MAP fails to resolve a dispute within a prescribed timeframe. Part VI requires an affirmative election by both treaty partners and is therefore not applicable to the UAE’s covered tax agreements.

As the UAE has not opted into Part VI of the MLI, and given the nascent stage of the Corporate Tax regime, no established policy or practice has developed in the UAE regarding the types of matters that may be submitted to arbitration under DTTs.

As the UAE has not opted into Part VI of the MLI, the question of the choice between baseball arbitration and the independent opinion procedure does not arise in the UAE context.

Please see 8.1 Mechanisms to Deal With Double Taxation and 10.1 Application of Part VI of the Multilateral Instrument (MLI) to Covered Tax Agreements (CTAs) regarding the UAE’s in terms of the MLI. The UAE has implemented the minimum standard provisions of the MLI, including updated MAP provisions and the PPT, but has not adopted the optional arbitration provisions under Part VI.

There is no applicable information in this jurisdiction.

As regards Pillar One, no specific implementing legislation has been introduced in the UAE to date, and the broader international framework for Pillar One remains under negotiation at the OECD level.

With respect to Pillar Two, the UAE introduced a Domestic Minimum Top-up Tax (DMTT), applicable to constituent entities of multinational enterprise groups with consolidated revenue of EUR750 million or more at an effective rate of 15%, with effect from financial years beginning on or after 1 January 2025. In August 2025, the OECD granted the UAE’s DMTT transitional qualified status.

The dispute prevention and tax certainty instruments envisaged under the Pillar Two framework remain at an early stage both globally and in the UAE context, and it remains to be seen how they will function in practice in this jurisdiction as the DMTT regime develops.

In the UAE, taxpayer-specific tax information is protected by statutory confidentiality rules. Under Article 44 of the Tax Procedures Law and Article 28 of the Executive Regulation, FTA employees and persons mandated by the FTA may not disclose information obtained in the course of their duties except in limited cases, including:

• disclosure ordered by a judicial authority for a civil or criminal case;
• disclosure to specified government entities under controlled arrangements;
• disclosure pursuant to international treaties; and
• disclosure to the taxpayer, its legal representative or its tax agent in relation to that taxpayer’s file.

In practice, this means that Tax Assessments, audit materials, taxpayer files, competent authority correspondence and settlement terms are treated as confidential.

The domestic dispute resolution process, as described in 3. Administrative Litigation and 4. Judicial Litigation: First Instance, remains by far the most commonly used framework for settling tax disputes in the UAE. Treaty-based mechanisms, including MAP under the UAE’s DTT network, are available in principle but have not yet been widely utilised in practice.

The engagement of independent professionals in tax disputes is well established in the UAE and is considered standard practice. Taxpayers routinely engage tax consultants, tax agents and legal counsel from the earliest stages of a tax audit, and such professionals typically represent taxpayers throughout the administrative and judicial dispute resolution process, including before the FTA, the TDRC and the federal courts. Regarding the involvement of independent professionals by the state, the federal courts retain discretion to appoint independent tax and accounting experts to assist in the adjudication of technically complex disputes, as described in 4.2 Procedure for Judicial Tax Litigation. Such court-appointed experts play a significant role in practice, as their findings, while not binding on the court, may carry considerable weight in the outcome of proceedings.

There are no filing fees payable by the taxpayer for dispute resolution at the administrative level. This applies to the following procedures:

• a Request for Review submitted to the FTA;
• a Request for Reconsideration submitted to the FTA; and
• an objection to the TDRC.

However, for an objection to be admissible before the TDRC, the taxpayer must pay in full the tax in connection with the objection.

The CPC lays down rules for determining the value of a claim. If the legal proceeding relates to a claim whose value cannot be determined according to the statutory rules, its value is deemed equal to the minimum threshold prescribed for challenge by way of cassation.

If the dispute is accepted and processed as a value-based claim, the law provides for the following fees for claims of known value:

• Federal Primary Court: 4% on the first AED500,000 and 6% on the excess, capped at AED45,000;
• Court of Appeal: 5% of the value under appeal, capped at AED15,000; and
• Federal Supreme Court (cassation): AED2,000, together with a security deposit of AED3,000.

A further AED1,000 is payable if the petitioner files a motion for stay of execution of the challenged judgment.

If, however, the matter is treated as an administrative claim, the law provides for AED3,000 for an administrative claim at first instance, and AED1,500 for appeals or cassation against administrative judgments and decisions.

The Case Management Office registers the case after the fees have been collected. The applicable fee treatment may effectively be clarified at filing stage, depending on how the claim is classified and valued by the court. The legal fee must be paid within three business days after notice for payment.

Beyond the main filing fee, separate procedural fees may also apply, including for notifications and announcements, expert applications, intervention applications and copies of judgments.

As a general rule, the court will order the losing party (or parties) to bear the legal costs, which may include court fees, attorney fees as determined by the court and certain procedural expenses. However, the court has discretion to depart from this rule, including by apportioning costs between the parties, ordering the successful party to bear all or part of the costs if it caused unnecessary expense, or imposing costs arising from malicious claims or defences on the party responsible. Any recovery of court fees by the successful party is therefore effected through the costs order against the opposing party rather than by a refund from the court. Interest is generally not awarded on court fees.

As a rule, no automatic indemnity follows merely because an additional Tax Assessment is held void or null. The UAE Tax Procedures Law provides for reversal of the tax position – in particular, excess amounts may be carried as a credit balance or refunded where the taxpayer is entitled to a refund. However, it does not appear to create a specific tax law right to compensation or indemnity simply because the assessment is annulled. The more usual consequence is that the assessment falls away, any excess paid may be recovered through the refund (credit-balance) mechanism, and court costs may be awarded against the losing party under the Civil Procedure Code. Any broader claim for damages would therefore need to rest on a separate legal basis outside the ordinary Tax Assessment appeal itself, rather than arising automatically from the nullity of the assessment.

Tax ADR mechanisms available in the UAE generally do not involve court fees or administrative filing fees. Applications to the FTA for administrative penalty waivers, instalment payments of penalties or refunds of administrative penalties are submitted electronically and are not subject to filing fees.

In particular, reconciliation in tax-related criminal offences is available at different stages of proceedings (prior to the initiation of a criminal case, during investigation and trial, and after a conviction judgment), and is subject to conditions that vary depending on the category of offence and the stage at which reconciliation is sought. Depending on these factors, the amounts payable range from fixed statutory sums of AED50,000 to AED200,000 to full settlement of the payable tax and administrative penalties, together with an additional amount of 50% to 75% of the evaded tax.

Requests for private clarifications from the FTA are subject to administrative fees, which are currently set at AED1,500 for a clarification relating to a single tax and AED2,250 for a clarification covering multiple taxes.

APA applications under the Corporate Tax framework are also subject to administrative fees. The current fee for submitting a unilateral APA request is AED30,000, while the renewal of an APA is subject to a fee of AED15,000.

MAPs available under DTTs do not involve filing fees in the UAE, although taxpayers may incur advisory and representation costs.

Comprehensive statistics on the number of tax cases currently pending before UAE courts are not publicly available. The UAE judiciary does not publish consolidated data on tax litigation volumes, case values or case results.

Certain judicial decisions and interpretative summaries are accessible through official resources. These include the UAE Ministry of Justice eLaws Case Law Database, which provides selected judgments of the Federal Supreme Court and other courts, and the Ministry of Justice page publishing recent court interpretations. These sources provide insight into judicial reasoning but do not contain aggregated statistics on pending tax cases.

Given the relatively recent introduction of most federal taxes in the UAE (particularly VAT in 2018 and Corporate Tax from 2023), tax litigation remains relatively limited.

Official statistics regarding the number of tax cases initiated or terminated each year by tax type are not publicly available in the UAE.

In practice, the majority of disputes historically have related to VAT assessments and administrative penalties, reflecting the introduction of VAT in 2018 and the enforcement activity of the FTA. A smaller number of disputes have involved Excise Tax, particularly in sectors such as tobacco and beverages.

With the introduction of federal Corporate Tax, applicable to financial years beginning on or after 1 June 2023, it is expected that corporate tax disputes will increase over time.

No official statistics are published regarding the success rate of taxpayers versus the FTA in UAE tax litigation.

Based on available published judgments and commentary, court decisions appear to depend largely on the specific facts of each case and the taxpayer’s compliance with procedural requirements. In some instances, UAE courts have ruled in favour of taxpayers – for example, where administrative penalties were imposed incorrectly or where the tax authority did not properly apply statutory provisions. In other cases, the courts have upheld decisions of the FTA, particularly where taxpayers failed to comply with procedural requirements, such as objection deadlines or statutory payment obligations prior to initiating a dispute.

Given the relatively recent introduction of most federal taxes in the UAE, particularly VAT in 2018 and Corporate Tax in June 2023, the body of publicly available tax litigation remains limited and continues to develop.

Once a tax controversy has arisen or cannot be avoided, the strategic focus shifts from prevention to effective management of the dispute.

• First, taxpayers should conduct an early technical assessment of their position. This includes identifying the precise legal and factual issues in dispute, assessing the strength of the position under the applicable legislation and administrative practice. At this stage, it may be critical to engage experienced tax and legal advisers with relevant UAE dispute experience. Given the relatively young and evolving nature of the UAE tax system, this often requires ongoing monitoring of the market to ensure access to advisers with up-to-date practical experience before the FTA and the courts.
• Secondly, strict adherence to procedural requirements is essential. The UAE tax dispute framework is highly formalistic, with short statutory deadlines and specific documentation requirements at each stage (reconsideration, TDRC and court proceedings). Failure to comply with procedural rules may result in the rejection of claims irrespective of their substantive merit.
• Taxpayers should also ensure that all communications with the FTA are carefully controlled and consistent with the overall legal position being taken.
• From a broader strategic perspective, taxpayers should consider all available opportunities for resolving the dispute under the law. This includes assessing whether certain aspects of the dispute may be resolved through mechanisms involving partial settlement (for example, in relation to administrative penalties), while continuing to challenge other elements.
• Finally, for cross-border matters, taxpayers should consider whether treaty-based remedies are available and appropriate. Similarly, where disputes relate to transfer pricing, the availability of APAs for future periods should be assessed as part of a forward-looking dispute management strategy.

Overall, effective management of tax controversies in the UAE requires a structured and disciplined approach combining technical analysis, procedural compliance and strategic decision-making throughout the life cycle of the dispute.