Introduction

Welcome to the December 2025 edition of the MNV Associates Tax Newsletter.

In this issue, we present a focused overview of the latest developments in UAE taxation, spanning both Corporate Tax and VAT. From new FTA clarifications to regulatory updates and compliance enhancements, this edition aims to provide businesses with clear, practical insight into the most important changes shaping the current tax landscape.

Corporate Tax

Advance Pricing Agrement Guide

On December 30, 2025, the UAE Federal Tax Authority (FTA) released the Advance Pricing Agreements Corporate Tax Guide. This guide explains the procedural framework for taxpayers seeking tax certainty through Advance Pricing Agreements (APAs) in the UAE.

Advance Pricing Agreements are formal arrangements between a taxpayer and the tax authority that provide advance certainty on the transfer pricing methodology to be applied to specified related-party transactions. Under the UAE Corporate Tax regime, APAs serve as an effective risk-management tool.

Key highlights of the APA guide:

Phased Introduction: The FTA will roll out its APA program in a phased manner, starting with Unilateral APA.

Effective Dates:

Domestic Controlled Transactions: Application accepted from December 2025

Cross-border Controlled Transactions: Commencement date will be announced in 2026

Duration: APAs shall cover a minimum of 3 and 5 periods and are currently applicable for prospective periods

Eligibility and Materiality

Threshold: A person or Tax Group can apply for an APA for domestic or cross-border controlled transactions, with a total value of at least AED 100 million per tax period.

Exclusions: Controlled transactions under safe harbour are excluded from the APA scope.

Fees:

New Application: AED 30,000

Renewal of an APA: AED 15,000

APA Lifecycle: The guide sets out a clear, structured lifecycle for concluding an Advance Pricing Agreement (APA) in the UAE. It begins with a mandatory pre-filing consultation. This is followed by the application stage, during which the taxpayer submits a formal application and pays a non-refundable fee within two months of pre-filing approval.

The evaluation stage involves a detailed review by the Federal Tax Authority, including potential site visits and negotiations on the transfer pricing methodology. The process concludes with the finalisation and signing of the APA.

Monitoring and review: Taxpayers with an APA are required to file an annual declaration for each tax period covered under the agreement. The FTA reviews these declarations to ensure compliance with the agreed transfer pricing methods.

Illustrative timeline:

Pre filing consultation: 6-9 months

Application: Within 2 months of pre filing approval

Evaluation and Negotiation: FTA will evaluate and analyse the APA application and provide its TP Analysis

Concluding APA and implementation: FTA and Taxpayer sign APA on mutually agreed terms

Indirect Tax

Finance Ministry Introduces Reverse Charge VAT Mechanism for Scrap-Metal Trading

The Ministry of Finance has announced the issuance of Cabinet Decision No. 153 of 2025 introducing the application of the reverse charge mechanism on local supply of metal-scrap between VAT registered business in the UAE, effective 14 January 2026.

Under the decision, the reverse-charge mechanism will apply to eligible domestic supplies of metal scrap made between VAT registered business in UAE. This measure is tailored to improve operational efficiency by shifting the responsibility of VAT accounting from the supplier to the recipient of goods.

The buyer becomes responsible for accounting for the VAT due and meeting all tax obligations arising from the supply. While the suppliers will no longer be required to charge VAT on these supplies.

The decision also sets out specific procedural requirements:

The recipient must provide a written declaration to the supplier confirming that the metal scrap is acquired for resale or processing purposes and that the recipient is registered with the Federal Tax Authority.

The supplier must obtain and retain the recipient’s declaration, verify the recipient’s VAT registration status, and clearly state on the tax invoice that the reverse charge mechanism applies.

Finance Ministry Unveils Cabinet Resolution on E-Invoicing Fines

The Ministry of Finance announced the issuance of Cabinet Resolution No. 106 of 2025 regarding violations and administrative fines resulting from non-compliance with the legislation regulating the Electronic Invoicing System.

The resolution applies to all entities required to implement the Electronic Invoicing System while persons applying the system voluntarily are exempt.

The resolution specifies the administrative fines for violations:

AED 5,000 per month for failing to implement or failing to appoint an approved service provider within the timeframe.

AED 100 per electronic invoice not issued or sent within the specified timeframe, with the total not exceeding AED 5,000 per month.

AED 100 per electronic credit note not issued or sent within the specified timeframe, with the total not exceeding AED 5,000 per month.

AED 1,000 for each day of delay for failing to notify the Federal Tax Authority of any malfunction in the Electronic Invoicing System.

AED 1,000 for each day of delay for failing to notify the appointed approved service provider of any modification to the data registered with the Authority.

This resolution represents a pivotal step in the UAE’s digital transformation journey and reflects the government’s firm commitment to applying international best practices.