This briefing document provides a comprehensive overview of the Federal Tax Authority’s (FTA) “Private Clarifications” mechanism, based on the Private-Clarifications guide. It highlights the main themes, important ideas, and key facts to assist in understanding the nature, eligibility, process, and associated considerations of seeking private tax guidance from the FTA in the UAE.
1. Introduction to Private Clarifications
The FTA, responsible for the administration, collection, and enforcement of federal Taxes in the UAE (Excise Tax, VAT, and Corporate Tax), offers a “private clarification mechanism” for taxpayers to seek guidance on “specific Tax matters of uncertainty that are not covered under the guides, public clarifications and other publications issued by the FTA.”
Key Idea: Private Clarifications are a supplementary mechanism for obtaining specific tax guidance beyond general FTA publications.
Nature of Clarifications:
- Official Document: A “Clarification” is an “official document issued by the FTA in response to a request from a specific Person regarding the Tax treatment of specific transactions.”
- Specificity: These documents are “issued to a specific Taxpayer, based on the Clarification request submitted on EmaraTax and the documents attached to the request.”
- Binding (Administrative): The FTA “considers itself administratively bound to follow the position stated in the Clarification if the factual circumstances are materially the same as set out in the Clarification request.”
- Information-Dependent: The FTA’s response is “based solely on the information and documents provided by the Applicant” and the FTA “will not verify the specific facts provided by the Applicant.”
- Void Ab Initio: A Clarification becomes “void ab initio (i.e. treated as if not issued)” if “any facts stated in the Clarification request…are different from the transaction actually carried out,” “there is fraud, misrepresentation or non-disclosure of a material fact,” or “any condition or assumption stipulated by the FTA…is not satisfied or carried out.”
- Cessation of Effectiveness: A Clarification ceases to be effective if “the provisions of the Tax legislation…are repealed or amended, or a public clarification or guide is later issued on the same subject.” The onus is on the Applicant to stay updated.
- Non-Binding Guide: It is crucial to note that the provided guide itself “is not a legally binding document.”
Important Fact: Clarifications are issued in the same language (Arabic or English) as the request.
2. Eligibility Criteria for Clarification Requests
There are stringent eligibility criteria concerning both the applicant and the nature of the request.
2.1 Eligible Persons:
- The Person seeking clarification: “The Person seeking clarification on a Tax matter of uncertainty may apply for a Clarification.”
- Tax Groups: For a Tax group, “only the representative member of that Tax group is permitted to request the Clarification, and this must be submitted through the EmaraTax account and TRN of the Tax group.”
- Tax Agents and Legal Representatives: May apply on behalf of the Person, but “only a Tax Agent registered with the FTA for the specific Tax type the request relates to, may submit the Clarification request.”
- Exclusion of Others: “Clarification requests submitted by Tax advisors/consultants or any other Person that is not the Taxpayer’s Tax Agent or Legal Representative will not be accepted.”
- Own Tax Affairs: Clarifications “will only address the Tax matters of uncertainty of the Applicant and not the Tax affairs of any other Person.”
- Joint Requests: In exceptional cases, “more than one Person may submit a joint Clarification request, e.g. where they are parties to the same transaction and the factual background information is agreed between them.” These are evaluated case-by-case.
- Corporate Tax: “For Corporate Tax, only Applicants registered for Corporate Tax are eligible to apply for a Clarification, unless the Clarification request relates to registration, or is submitted by an Exempt Person.”
- Excise Tax and VAT: Taxpayers are eligible “regardless of whether the Person is registered for the specific Tax type or not.”
2.2 Eligible Matters:
- Specific Tax Matter of Uncertainty: Applicants “may only apply for a Clarification if there is a specific Tax matter(s) of uncertainty.”
- Requirements for Eligibility: The request must:
- Relate to “federal Taxes or relevant administrative penalties, but not the waiver thereof.”
- “Clearly indicate the relevant Tax type.”
- Relate to “Tax legislation as applied to the facts and circumstances of the Taxpayer.”
- “Contain all the relevant information the FTA needs to consider for deciding on the correct Tax treatment.”
3. Grounds for Rejection
The FTA outlines instances where Clarification requests will be rejected and where they may be rejected.
3.1 Grounds for Rejection (Will be Rejected):
- Applicant Not Eligible:No proof of authorisation for a representative.
- Tax Agent/Legal Representative submitting without Taxpayer’s details (unless unregistered).
- Tax Agent not registered for the specific Tax type.
- Corporate Tax clarification from an unregistered applicant (unless regarding registration or an Exempt Person).
- Natural person applicant for a juridical person’s matter.
- Non-representative member of a Tax group applying.
- Tax advisor/consultant submitting on behalf of a Taxpayer without being a registered Tax Agent or Legal Representative.
- Request not submitted via the Applicant’s own EmaraTax profile (if registered).
- Out of Scope Cases:Administrative exceptions, administrative penalties (instalments/waivers), advance pricing agreements (applications for unilateral APAs received from Q4 2025), apportionment, commercial activity certificates, IT system issues, Pillar Two (GloBE Rules) (submission date to be announced), reconsideration, tax assessment review, and tax residency certificates (unless on eligibility to apply for one).
- “Many of the above cases fall outside the scope of the Clarification service due to the availability of an alternative service.”
- Failure to Respond to Additional Information: If the Applicant “failed to submit all the requested information or documents within 40 Business Days.”
3.2 Grounds for Rejection (May be Rejected):
- Incomplete or Incorrect Requests: Examples include:
- Insufficient relevant information or Tax technical analysis (including references to legal provisions and guidance, and tax advice obtained).
- Lack of an alternative Tax technical analysis (may indicate no genuine uncertainty).
- Missing supporting documents (e.g., invoices, contracts).
- Incomplete fields in the request form or discrepancies between form and attached documents.
- Request not relating to the correct Tax type(s).
- No Tax Matter of Uncertainty:Matter already clarified in an FTA guide, public clarification, or a previous Clarification to the same Applicant.
- Applicant merely seeking confirmation of their position/status (e.g., Qualifying Free Zone Person, Government Entity/Charity status, Extractive/Non-Extractive Natural Resource Business, Exempt Person status under specific Corporate Tax articles, eligibility to form/amend/leave a Tax group, change Tax Period, or amend Tax Registration details).
- Tax Audits and Tax Assessments:A Tax Assessment on the same matter was previously issued.
- Applicant is subject to a Tax Audit, Tax Assessment, or inspection relating to the subject matter of the request.
- Other Cases:Hypothetical scenarios “not been seriously considered by the Applicant.”
- Requests for Tax advice from the FTA (e.g., how to become a Qualifying Free Zone Person).
- Requests to confirm matters of fact only ascertainable during an audit (e.g., adequate substance).
- Requests to confirm arm’s length standard or Market Value for related party transactions (requires advance pricing agreement).
- Requests relating to more than one Tax but not concerning the “same specific Tax matter” (e.g., VAT on employee benefits and Corporate Tax on distribution activities require separate requests).
- Requests for administrative processes (e.g., amending registration details, making elections).
- Requests addressing “issues that the FTA suspects may constitute Tax planning, Tax avoidance or Tax evasion.”
4. Clarification Process
The process is managed entirely through EmaraTax and requires specific documentation.
4.1 Applying for a Clarification:
- Platform: Requests are “only accepted via EmaraTax.”
- Language: Requests and issued Clarifications can be in “English or Arabic.”
- Form Completion: “All of the mandatory fields of the request form must be completed with sufficient detail.”
- Required Supporting Evidence:Cover Letter: Should describe “background facts, the specific Tax technical query, relevant UAE Tax legislation considered, the Applicant’s technical view as well as any alternative Tax treatment.”
- Documentary Evidence: “Contracts, invoices, correspondence, etc.”
- Third-Party Tax Advice: Any advice received on the specific matter.
- File Formats and Size: Documents in “Excel, JPEG, JPG, PDF and PNG format. The individual file size limit is 5 MB.”
- Fee: “AED 1,500 per application” for a single Tax, and “AED 2,250 per application” for more than one Tax. Fees are generally “non-refundable.”
- Submission Deadline: Request must be submitted “within 40 Business Days from the date the Applicant initiated the Clarification request on EmaraTax.”
- Withdrawal: Applicants “are allowed to withdraw their Clarification request,” but the fee is forfeited “unless the request is withdrawn within two Business Days from the date the request was submitted.”
4.2 Validation and Issuance:
- Eligibility Review: The FTA reviews the request for eligibility and grounds for rejection.
- Additional Information: If accepted, the FTA may request further information, which must be submitted “within 40 Business Days.” Failure to do so leads to rejection.
- Issuance Timeline: Clarifications are issued “within 60 Business Days” from receipt of the request or the requested further information. Complex matters may require extensions.
- Separate Clarifications: For requests covering more than one Tax type, “separate Clarifications will be issued for each Tax type.”
5. Refunding Clarification Fees
Fees are generally non-refundable, but specific exceptions allow for a refund.
Refundable Cases: The FTA may refund the fee if it decides not to issue the Clarification under any of the following circumstances:
- Applicant withdraws the request “within two Business Days.”
- Applicant is not registered for Corporate Tax and the request relates to Corporate Tax (other than registration).
- Applicant is subject to a Tax Audit at the time of submission.
- Request relates to procedures from an FTA Decision.
- Duplicate request by the same Applicant on the same subject.
- Matter is being coordinated with the Ministry of Finance for legislative amendment.
Extent of Refund:
- Single Tax: Full refund of AED 1,500.
- More than one Tax (no Clarification issued): Full refund of AED 2,250.
- More than one Tax (Clarification issued for one Tax): Partial refund of AED 750 (difference between multi-tax and single-tax fees).
6. Disagreeing with Issued Clarifications
“A Clarification is not considered to be a decision that is issued by the FTA and, therefore, is not subject to the dispute resolution process.”
- No Reconsideration/Review: Applicants “cannot apply for a reconsideration or review of a Clarification.”
- New Request Option: A new Clarification may be applied for if “factual circumstances are materially different” or if “new information” is available.
7. Common Errors
The guide highlights frequent errors leading to rejection or requests for further information:
- Incorrect applicant entity (natural vs. juridical person).
- Incorrect Tax group member applying (not the representative/parent).
- Submission by non-registered Tax advisors.
- Incomplete forms, merely referring to attachments, or repeating responses.
- Failure to provide a cover letter, sufficient background, or supporting information.
- Contradictory information across documents.
- Lack of Tax technical analysis and alternative Tax treatments.
- Reliance on non-UAE Tax laws.
- Requests for administrative exceptions, reconsiderations, or waivers.
- Requests on matters already clarified by the FTA.
- Requests for confirmation without specifying uncertainty.
- Requests for confirmation of eligibility/reliefs/exemptions without specifying uncertainty.
Cover Letter Structure Recommendation: Applicants should structure their cover letter with clear headings for “Background information,” “Request,” “Legislation and guidance considered,” “Analysis of the matter and technical assessment,” and “Alternative Tax treatment” to ensure all necessary details are provided.
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