FTA Decision No. 2 of 2025: Updated Policy on Tax Clarifications and Directives

UAE, 4 March, 2025 : The Federal Tax Authority (FTA) has issued Decision No. 2 of 2025, establishing a revised policy for issuing clarifications and directives to taxpayers in the UAE. The decision, effective March 1, 2025, aims to provide greater clarity on tax obligations and procedures.

The FTA’s updated framework outlines the issuance of private and public clarifications, guides, and e-learning programs. It also sets guidelines for administrative exceptions, input tax apportionment, and advance pricing agreements. The decision emphasizes stricter procedures for requesting clarifications, ensuring that only well-documented and relevant cases are considered.

Taxpayers can submit requests for private clarifications, but they must meet specific conditions, including demonstrating uncertainty in tax law application. The FTA may reject requests if the issue is already covered in existing guidance or relates to hypothetical scenarios. For input tax apportionment, businesses seeking alternative methods must justify the need for deviation from standard VAT rules.

Additionally, the FTA will begin accepting applications for unilateral advance pricing agreements (APAs) in Q4 2025, with further details on other APA types to be announced later.

This decision aligns with the UAE’s ongoing efforts to enhance tax transparency, compliance, and efficiency. The full policy is available in the Official Gazette.