GCC Tax & Regulatory Round-Up | August 2026

July 2026 brought a broad mix of tax, regulatory, treaty and trade developments across the GCC, with the UAE Federal Tax Authority (FTA) remaining particularly active.

Key UAE releases included guidance on downward transfer pricing adjustments, a consolidated overview of private tax clarifications, five VAT directives, and updates affecting the Tourist Refund Scheme and the education sector. Together, these developments reflect the continued focus on greater clarity and consistency in applying the UAE tax framework.

International tax cooperation also gathered pace across the wider GCC. Qatar advanced its treaty relationship with Uruguay, while Bahrain and India, and Canada and Saudi Arabia, progressed treaty discussions. These steps underline the region’s continued efforts to strengthen cross-border tax cooperation and economic relationships.

Trade activity remained equally notable. The UAE–Ukraine Comprehensive Economic Partnership Agreement (CEPA) took effect on 1 July 2026, and the UAE and Canada concluded CEPA negotiations later that month. At regional level, discussions on a potential GCC–EU free trade agreement also continued ahead of the upcoming GCC leaders’ summit.

Businesses should also keep the broader compliance agenda in view, particularly the UAE’s upcoming e-invoicing implementation and other corporate tax registration and reporting requirements. Early preparation will be increasingly important as businesses assess the operational impact of these changes and align their systems and processes accordingly.

Overall, July demonstrated the continued pace of tax and trade developments across the GCC. For businesses operating in the region, staying informed and assessing the practical impact of regulatory changes will remain essential for maintaining compliance and supporting effective business planning.

Downward Transfer Pricing Adjustments: New FTA Disclosure Guidance

The UAE Federal Tax Authority (FTA) has issued Corporate Tax Public Clarification CTP011, providing important clarification on how taxpayers should handle downward transfer pricing adjustments for Corporate Tax purposes.

The clarification confirms that taxpayers may make a downward transfer pricing adjustment through self-assessment without obtaining prior approval from the FTA. However, this flexibility comes with a stronger emphasis on disclosure and supporting documentation, as the position remains subject to potential review or audit.

Where transactions with Related Parties are not reflected at arm’s length in the financial statements, taxpayers may need to adjust the relevant amounts when determining taxable income. While an upward adjustment increases taxable income, a downward adjustment reduces it. The latest clarification provides greater certainty around the process for making such downward adjustments.

A key point is the enhanced disclosure requirement. Unlike the general threshold-based approach applicable to certain Related Party transaction disclosures, a downward adjustment must be disclosed irrespective of the value of the underlying transaction. This places greater responsibility on taxpayers to ensure that the relevant transactions and adjustments are accurately reported in the Corporate Tax Return.

The FTA has also indicated the importance of maintaining adequate evidence to support the adjustment. This may include the commercial rationale, an appropriate arm’s length analysis, benchmarking information, reconciliation between accounting records and the Corporate Tax Return, and evidence that the corresponding Related Party has adopted a consistent treatment where applicable.

The clarification is specifically relevant to adjustments made under Article 34(1) of the UAE Corporate Tax Law and does not change the treatment of corresponding adjustments under other provisions.

Five New FTA VAT Directives: Key Areas to Review

July 2026 marked an important development in the UAE VAT framework, with the Federal Tax Authority (FTA) issuing five Directives on Tax Transactions covering a range of practical VAT matters.

These directives are particularly significant because they provide a formal administrative position on specific tax treatments and are binding on both the FTA and taxpayers until they are replaced or the relevant legislation is repealed. This provides businesses with greater certainty when dealing with areas that may previously have required interpretation.

The new directives address several distinct areas of VAT application, including the treatment of judicial expert services, VAT adjustments following the exit of a member from a VAT Tax Group, and the valuation of digital currency transactions for VAT reporting purposes.

The FTA has also provided clarification on the VAT treatment of fees and charges associated with life insurance and life reinsurance. The treatment depends on the nature of the service, its connection with the underlying insurance supply, and whether a separate charge is made. This may also have implications for the related input VAT recovery position of businesses operating in the sector.

Another important development concerns the valuation of deemed supplies of services. The FTA has introduced a defined methodology for determining the value of such supplies, linking the calculation to relevant costs and the taxpayer’s applicable financial information.

Taken together, these directives represent a further step towards establishing clearer and more consistent approaches to VAT compliance in the UAE. They also demonstrate the FTA’s continued focus on addressing practical issues that arise in the application of the VAT legislation.

Businesses operating in affected areas should consider whether the new directives require any changes to their VAT treatment, reporting processes, documentation, or internal controls. Particular attention may be appropriate for businesses involved in financial services, digital assets, insurance, professional services, and corporate restructuring.

Tourist Refund Scheme: Updated Fee and Existing Conditions

The UAE Federal Tax Authority (FTA) has issued Decision No. 11 of 2026, effective from 12 July 2026, updating the framework governing VAT refunds available to eligible overseas tourists.

The latest decision largely consolidates the rules that have developed since the introduction of the Tourist Refund Scheme in 2018. Rather than introducing broad changes to the existing framework, the key adjustment relates to the fee charged for processing each refund claim.

Under the updated rules, the fixed fee has been reduced to AED 3.60 per refund claim. Although the reduction may appear relatively small for individual transactions, it can provide meaningful cost savings for retailers and operators handling a significant volume of tourist refund claims.

The wider framework of the scheme remains substantially unchanged. The administrative fee continues to be calculated at 13% of the VAT amount being refunded, while cash refunds remain subject to a AED 35,000 limit per tourist within a 24-hour period. The existing minimum purchase threshold of AED 250, also continues to apply.

Eligible goods must generally be exported within 90 days from the date of supply to qualify for a refund. The scheme also continues to accommodate qualifying online purchases where the required conditions are met. Certain categories of goods, including motor vehicles, boats and aircraft, as well as goods consumed within the UAE, remain outside the scope of the tourist refund mechanism.

The decision represents another step in the UAE’s ongoing refinement of its VAT refund framework. For businesses participating in the scheme, particularly high-volume retailers, the revised fee structure is worth considering when assessing the operational and financial impact of tourist VAT refund transactions.

Education Sector VAT Guide: Key Points for Institutions

The UAE Federal Tax Authority (FTA) has issued a dedicated VAT Guide for the Education Sector, providing further clarity on the application of VAT to educational services and related activities.

While the underlying VAT rules for education have remained unchanged since their introduction in 2018, the new guidance brings together the relevant principles and provides greater clarity for educational institutions when determining the appropriate VAT treatment of their activities.

The guidance confirms that VAT zero-rating for educational services is subject to specific eligibility requirements. The treatment generally depends on the status of the educational institution and whether the education is delivered through a curriculum recognised by the relevant authorities. As a result, not all educational services, particularly those provided by private higher education institutions, will qualify for zero-rating.

The FTA has also clarified the VAT treatment of goods and services connected with education. Items that are directly linked to and integral to a qualifying educational curriculum may benefit from the applicable preferential treatment, while other supplies such as uniforms, electronic devices, food and beverages, application charges, and many extracurricular activities generally remain subject to the standard VAT rate.

Additional guidance has been provided on areas including student accommodation, school transportation, distance learning, scholarships, grants, and donations. These activities may require institutions to consider the specific nature of the supply and the circumstances in which it is provided when determining the correct VAT treatment.

Educational institutions should also take note of the 31 December 2026 deadline for claiming eligible VAT refunds that remain outstanding under the applicable procedures.

Corporate Tax Private Clarifications: Consolidated FTA Summary

As businesses progress through the UAE Corporate Tax filing cycle, the Federal Tax Authority (FTA) has published a consolidated summary of private clarifications addressing a range of practical questions arising under the Corporate Tax regime.

The publication brings together guidance across approximately 20 areas, offering businesses additional insight into how the FTA approaches issues where the application of the Corporate Tax rules may require further interpretation. While private clarifications are issued in response to specific circumstances, the consolidated summary provides a useful reference for taxpayers dealing with similar situations.

The topics covered extend across several important areas of Corporate Tax compliance and structuring. These include the tax treatment of exempt entities, Permanent Establishments, unincorporated partnerships, family foundations, Free Zone businesses, participation exemptions, taxable income and Tax Groups.

Particular attention is given to the Qualifying Free Zone Person regime, including matters relating to substance requirements, Qualifying Income and eligible activities. The clarifications also address practical questions surrounding participation exemptions, transitional rules for certain real estate interests, and the treatment of specific income and accounting matters.

The summary further considers Corporate Tax registration and filing obligations for different types of businesses and structures, including entities operating without conventional trade licences, partnerships, converted businesses and non-resident entities with a UAE Permanent Establishment. Financial reporting requirements and the use of foreign accounting standards are also addressed.

These clarifications are especially relevant as businesses continue preparing Corporate Tax returns and reviewing the positions adopted in their earlier compliance cycles. Free Zone entities may also find the guidance useful when reassessing their eligibility for the Qualifying Free Zone Person regime, while multinational groups should consider the implications alongside their broader UAE tax and Pillar Two compliance requirements.

The publication reinforces the importance of reviewing Corporate Tax positions not only against the legislation itself, but also against the evolving administrative guidance issued by the FTA.

GCC Treaty and Trade Developments: July 2026

July 2026 saw continued momentum across the GCC in international tax cooperation and trade relations, with several developments that could influence cross-border investment, withholding taxes, market access, and regional business structures.

Qatar’s international tax network received further attention following the approval by Uruguay’s Senate of the income tax treaty signed between the two countries in December 2025. The treaty will now proceed through the next stage of Uruguay’s legislative process. Once effective, it is expected to provide a framework for allocating taxing rights over areas such as dividends, interest, royalties, technical services, permanent establishments, and certain capital gains. For businesses with Qatar–Uruguay activities, the agreement may have particular relevance when assessing withholding tax exposure and cross-border investment structures.

Treaty activity also expanded elsewhere in the region. Bahrain and India commenced their first round of negotiations towards a tax treaty, while Canada and Saudi Arabia agreed to begin negotiations for their own agreement. Although these discussions remain at an early stage, the developments demonstrate the continued expansion of the GCC’s international tax relationships and the growing importance of treaty networks for multinational businesses.

Trade developments were equally significant. The UAE–Ukraine Comprehensive Economic Partnership Agreement (CEPA) entered into force on 1 July 2026, introducing enhanced market access and reduced customs barriers between the two economies. Later in the month, Canada and the UAE concluded negotiations for a CEPA, with the agreement expected to take effect following the necessary ratification and implementation procedures.

The UAE’s wider CEPA programme also continued to progress, with agreements at different stages of negotiation, ratification, and implementation across multiple markets. These efforts form part of the UAE’s broader strategy to strengthen international trade links, diversify economic partnerships, and facilitate cross-border commercial activity.

At the regional level, discussions around reviving the long-standing GCC–EU free trade initiative also gained renewed momentum. Current discussions reportedly place greater emphasis on sector-specific cooperation, including areas such as digital trade, renewable energy, and industrial supply chains.

Taken together, these developments highlight the increasingly interconnected nature of tax policy and trade strategy across the GCC. As treaty networks expand and market-access agreements progress, businesses operating across the region should consider how these changes may affect their investment structures, withholding tax positions, supply chains, and international expansion plans.

For multinational groups and businesses with GCC operations, monitoring the implementation of these agreements will be important, particularly as several initiatives move from negotiation into practical application.

If you would like to discuss any customs implications or trade-related considerations across the GCC region, please contact our team at info@corporategroup.me.