Welcome to the February 2026 edition of the MNV Associates Tax Newsletter.
In this issue, we present a focused overview of the latest developments in UAE & other GCC countries 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.
On 20 February 2026, the UAE Federal Tax Authority (FTA) published an updated list of Qualifying Public Benefit Entities (QPBEs). Under the UAE Corporate Tax Law, entities specifically listed in this Cabinet Decision are eligible for an exemption from Corporate Tax, provided they operate exclusively for non-profit purposes—such as charitable, social, cultural, or religious activities—and do not distribute profits to private individuals.
This update is critical for non-profit organizations to verify their ongoing eligibility and ensures that donors can continue to claim tax deductions for contributions made to these recognized entities. Impacted organizations are encouraged to review the revised list to confirm their status and ensure full compliance with the FTA’s administrative and record-keeping requirements.
On 17 February 2026, the Federal Tax Authority (FTA) released a comprehensive new user manual specifically covering Tax Registration and Tax Agent Resubmissions. This guide provides much-needed clarity on the end-to-end registration process within the EmaraTax portal, offering step-by-step instructions for both businesses and tax agents.
Crucially, the manual outlines the formal procedures for handling “resubmission” requests from the FTA, ensuring that any flagged applications are corrected and resubmitted accurately to avoid delays or potential late registration penalties. Taxpayers and practitioners are advised to consult this manual to streamline their compliance workflows and ensure all documentation meets the latest regulatory standards.
The UAE Federal Tax Authority (FTA) has established specific Standards, Controls, and Procedures for managing shortages of excise goods within Designated Zones (DZs) that occur due to their natural characteristics (such as evaporation, shrinkage, or moisture loss). Under these regulations, Warehouse Keepers are required to maintain rigorous documentation to prove that any volume or weight discrepancy is a direct result of the product’s nature rather than leakage, theft, or unauthorized release.
To qualify for a tax-free allowance on these shortages, the entity must adhere to FTA-prescribed percentage thresholds and provide scientific or technical justification for the loss. Failure to implement these controls or exceed the allowed variance without adequate proof may result in the shortage being treated as a “release for consumption,” triggering immediate excise tax liability and potential administrative penalties.
The Federal Tax Authority has released updated guidance regarding the Annual VAT Apportionment adjustment, which is a critical year-end requirement for businesses making both taxable and exempt supplies. This process ensures that input tax recovery accurately reflects the actual use of goods and services throughout the calendar year. Businesses must perform a final “wash-up” calculation to reconcile the provisional input tax claimed in their periodic returns against the actual annual entitlement based on the full year’s turnover or usage. It is essential to finalize these adjustments and report them in the first tax return following the end of the tax year to avoid under-declarations and ensure full compliance with the updated apportionment methods and documentation standards.
The UAE has implemented Cabinet Decision No. 209 of 2025, establishing a unified framework for the Exchange of Information Upon Request (EOIR) for Tax Purposes. It formalizes the procedures for collecting and sharing financial and beneficial ownership data with international tax authorities.
By streamlining how information is requested and provided, the Decision reinforces the UAE’s commitment to global tax transparency and the prevention of cross-border tax evasion.
Businesses and financial institutions should ensure their records—particularly regarding Ultimate Beneficial Ownership (UBO) and accounting data—are accurate and readily accessible.
The UAE Ministry of Finance has reached a significant milestone in the rollout of the National E-Invoicing System by publishing the Official E-Invoicing Guidelines (V1.0). This foundational document, alongside the newly released Mandatory E-Invoice Data Fields, provides the technical and operational roadmap for businesses to align their billing systems with the upcoming federal requirements.
Additionally, the Ministry has released an updated list of accredited e-invoicing service providers, offering a vetted selection of partners to assist with seamless integration. As the transition to a fully digital tax environment accelerates, businesses are urged to review these data requirements immediately to identify necessary system upgrades and ensure their accounting software can generate compliant electronic records ahead of the mandatory implementation phases.
In a significant move toward a fully paperless trade environment, Dubai Customs has officially launched Phase One of the Digital MAKASA system. This initiative enables the entirely digital processing of customs clearing for goods destined for other GCC countries via the Dubai Trade Portal, effectively eliminating the need for physical visits to customs centers. By automating the “Makasa” (Claims and Settlement) procedures, the system drastically improves customs efficiency, reduces manual documentation errors, and accelerates the movement of transit goods across regional borders. Businesses operating in Dubai and exporting to the GCC are encouraged to transition their workflows to the digital portal to take advantage of faster processing times and streamlined clearance cycles.
On 16 February 2026, the Zakat, Tax and Customs Authority (ZATCA) published draft regulations for public consultation concerning Economic Substance Requirements for the Kingdom’s four major Special Economic Zones (King Abdullah Economic City, Ras Al-Khair, Jazan, and the Cloud Computing SEZ).
These rules define the level of operational activity and local presence required for entities to qualify for the SEZ tax incentives, which include 0% Corporate Tax for up to 20 years, 0% VAT on local goods, and exemptions from Withholding Tax (WHT). Businesses operating in or planning to enter these zones must ensure their local “substance”—such as employee headcount and local expenditure—aligns with these new standards to maintain their tax-exempt status.
Bahrain has concluded the first fiscal year for multinational groups subject to the Domestic Minimum Top-up Tax (DMTT), marking a significant step in its alignment with the OECD Pillar Two global minimum tax framework. Tax authorities have issued a strong emphasis on timely compliance and accurate reporting for all in-scope entities—typically those belonging to groups with consolidated annual revenues exceeding EUR 750 million.
As the first filing cycles approach, affected groups must ensure their accounting systems are capable of calculating the effective tax rate per jurisdiction and managing the specific DMTT returns required by the Bahraini authorities. Failure to meet these global standards may lead to significant corrective adjustments and administrative penalties.
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