Introduction

Welcome to the October 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

Additional updates on Valuation Method for Real Estate Developers under Corporate Tax (CT) Transitional Rules as per the FTA Public Clarification CTP009

The Federal Tax Authority has issued further clarity on how Real Estate Developers should determine Market Value when applying the valuation method under the Corporate Tax transitional rules. These rules are particularly relevant when calculating the excluded gain for Qualifying Immovable Property (QIP) held at the start of the first Tax Period.

The Market Value may be determined by outsourced third parties authorised by the government competent authority. A Market Value determined by persons that are not authorised by the relevant government competent authority will not be accepted for the purpose of computing the adjustment under the transitional rules.

If the Market Value does not only relate to QIP it would not be considered acceptable for the purposes of the adjustment, unless reasonable adjustments are made:

A portion of the real estate development project may have already been disposed of or deemed to have been disposed of prior to the start of the first Tax Period.

The real estate development project may include Immovable Property that will not be disposed of to customers.

The Market Value in respect of a real estate project under construction may not reflect its partially completed state.

Basis of election under Article 2(5) of Ministerial Decision No. 120 of 2023 for application to ‘each’ QIP

The Federal Tax Authority has clarified how Real Estate Developers should apply the valuation-based election available under Article 2(5) of Ministerial Decision No. 120 of 2023.

The election is in respect of each QIP. Therefore, the Market Value, original cost, and net book value should be determined in respect of each QIP. QIP can be either the entire real estate development project or specific unit(s) within the project.

Indirect Tax

VATGIT1 – Updated Input Tax Apportionment Guide

The Federal Tax Authority has issued an updated Input Tax Apportionment Guide on 30th September 2025. The revised guidance is particularly relevant for sectors such as financial services, real estate, educational institutions, insurance companies and other mixed-activity businesses.

Specified Recovery Percentage (SRP)

The SRP is a mechanism that permits eligible taxpayers to apply a fixed input tax recovery rate for the entire tax year. The percentage is determined using the previous year’s actual recovery rate, offering a more efficient approach.

Requirements:

The prior year’s full annual wash-up.

Actual use adjustment calculations (if relevant).

Detailed reconciliations tied to submitted VAT returns.

Once approved, the SRP is valid for four years, and businesses must retain the method for at least two years before requesting a change.

Blocked Input Tax

The updated guide provides clearer direction on the treatment of blocked input tax. Any input tax explicitly disallowed must be completely excluded from the apportionment calculation.

Special Input Tax Apportionment Methods

For large or diversified businesses and Tax Groups with multiple independent divisions, the standard or special apportionment methods may not accurately reflect how input tax relates to each activity.

Validity periods are now clearly restated:

Non-sectoral methods: valid for 4 years

Sectoral methods: valid for 2 years

VAT Group Eligibility & Turnover Declaration – New Requirements

The FTA has introduced a revised template for VAT Group Eligibility and Turnover Declaration. VAT Group members must now confirm compliance with Articles 9 and 10 of the Executive Regulations.

“My Audit” Section on EmaraTax

The Federal Tax Authority has launched a new “My Audit” feature on the EmaraTax portal, giving businesses clearer visibility and control during tax audits.

Practical Takeaways:

Monitor any ongoing audits directly through the EmaraTax portal.

Keep track of audit progress and FTA requests in real time.

Upload and manage all submissions seamlessly within the portal.