The UAE Federal Tax Authority issued FTA Decision No. 9 of 2025 on 4 December 2025, setting out the conditions under which the FTA may decline to refund residual tax amounts while a person is under a tax audit. It takes effect from 1 January 2026 and applies across VAT, Excise Tax and Corporate Tax.
Key takeaways
- FTA Decision No. 9 of 2025 was issued on 4 December 2025 and is effective from 1 January 2026.
- It applies to any person subject to a tax audit, and to refund requests across VAT, Excise Tax and Corporate Tax, irrespective of the tax type.
- The FTA may decline a refund of residual amounts where any of six specific conditions is met.
- The triggers include potential tax exposure from the audit, suspicion of tax evasion, supply-chain evasion risk, outstanding returns, failure to provide information, and lack of cooperation.
- Even routine compliance failures, such as pending returns or slow responses, can hold up a refund, with a direct effect on cash flow.
What Decision No. 9 actually changes
Decision No. 9 gives the FTA explicit grounds to hold back a residual refund while it examines a taxpayer under audit. A "residual amount" here is the credit balance a taxpayer would otherwise receive back. Before this Decision, a refund that had cleared the arithmetic was largely procedural: if the return showed a balance owed back to the taxpayer, it was paid.
The key shift is that refunds across VAT, Excise Tax and Corporate Tax are no longer automatic once a person is under audit. The conditions apply regardless of which tax generated the credit, so a business sitting on a VAT repayment and an unrelated Corporate Tax query can find the repayment paused because of the query. For finance teams, a refund that was treated as near-certain cash now carries audit risk until the review closes.
The Decision does not create the audit power from nothing. It sits under the Tax Procedures Law, Federal Decree-Law No. 28 of 2022, which governs how the FTA administers all federal taxes, and it operates alongside the Corporate Tax Law, Federal Decree-Law No. 47 of 2022. What Decision No. 9 adds is a clear, published list of the circumstances in which a residual balance can be held back during an audit, so the Authority and the taxpayer work from the same set of triggers rather than case-by-case discretion.
The six conditions for withholding a refund
The FTA may decline the refund where any one of the following applies. They range from substantive tax-risk grounds to conduct-based triggers.
| # | Condition | What it means |
|---|---|---|
| 1 | Potential tax exposure | Sufficient evidence suggests significant additional tax liabilities may arise from the audit |
| 2 | Suspicion of tax evasion | Reasonable grounds exist to believe the taxpayer is involved in tax evasion |
| 3 | Supply-chain risk | The refund relates to transactions or goods suspected of being linked to evasion within the supply chain |
| 4 | Outstanding filings | The taxpayer has pending or unfiled returns for any type of tax |
| 5 | Failure to provide information | Requested information or documentation is not supplied within the prescribed timelines |
| 6 | Lack of cooperation | The taxpayer does not cooperate with the FTA during the audit |
Conditions one to three are about the substance of the tax position and the integrity of the supply chain. Conditions four to six are about behaviour during the audit itself, and they are the ones most businesses can control.
A refund is no longer procedural once you are under audit. An unfiled return or a missed information deadline, even on an unrelated tax, can be enough for the FTA to withhold cash you were expecting back.
Why this matters for cash flow
The practical impact is a treasury issue as much as a tax one. Businesses that build expected refunds into their cash-flow forecasts, common for exporters and other regular VAT-repayment positions, need to treat those refunds as contingent while an audit is open. A held refund is not a penalty and does not mean wrongdoing has been found; conditions four to six can be triggered by administrative slippage alone. But the cash stays with the Authority until the audit position is resolved.
A refund held under one of these conditions turns on the outcome of the audit, so for a business with a sound position the practical cost is timing and cash flow while the review runs, rather than a lost entitlement. The clearest way to reduce the risk is housekeeping: keep every tax type filed and up to date, respond to FTA requests inside the stated deadlines, and keep the documentation that supports a refund ready to hand over. Because the Decision applies from 1 January 2026, that discipline matters for any refund position carried into the 2026 audit cycle.
Frequently asked questions
What is FTA Decision No. 9 of 2025?
FTA Decision No. 9 of 2025 is a Federal Tax Authority decision, issued on 4 December 2025 and effective from 1 January 2026, that sets the conditions under which the FTA may decline to refund residual tax amounts to a person who is under a tax audit. It applies to VAT, Excise Tax and Corporate Tax.
When can the FTA withhold my tax refund?
The FTA may withhold a refund during an audit where any of six conditions applies: potential additional tax from the audit, suspicion of evasion, supply-chain evasion risk, outstanding returns for any tax, failure to provide requested information on time, or a lack of cooperation during the audit.
Does Decision No. 9 apply to VAT refunds or only Corporate Tax?
Decision No. 9 applies across VAT, Excise Tax and Corporate Tax. The conditions bite irrespective of the tax type, so a credit arising under any of these taxes can be held if the person is under a tax audit and a condition is met.
How can a business avoid having a refund declined?
Keep all returns filed and current, respond to FTA information requests within the prescribed timelines, cooperate fully during the audit, and retain the documentation that supports the refund. Conditions four to six are conduct-based and are largely within the taxpayer's control.
How SBC Tax Consulting can help
If your business is under review or expecting a refund, the response window is tight. Our tax audit and dispute specialists manage FTA information requests, protect refund positions and keep audits on track. We also support recurring VAT advisory and corporate tax compliance so that outstanding filings do not become the reason a refund is held. To review your exposure ahead of 1 January 2026, contact our team.
This publication is for general information only and does not constitute professional advice. Please consult your SBC advisor before acting on any matter covered here.