UAE assigns VAT adjustments after a member leaves a tax group

The departing member reports later adjustments

The directive applies where a person ceases to be a member of a UAE VAT group but remains registered. If an adjustment relates to that person’s taxable supplies or taxable expenses from before its exit, and the original amount was reported in the group’s VAT returns, the former member must make the adjustment in its own VAT return. The rule applies from 1 August 2026.^[1][4]

Reductions in value are expressly covered

Directive 2 expressly includes later reductions in the value of taxable supplies previously declared by the group. It also covers reductions in taxable expenses for which input VAT was recovered through the group’s returns. The former member must retain documents and records demonstrating that the adjustment relates to supplies or expenses previously reported by the group.^[1]

How the rule fits the VAT-group framework

Federal Decree-Law 8 of 2017 permits related persons meeting the statutory conditions to register as a tax group. Under the Executive Regulation, the group’s representative member is treated as making or receiving external supplies and accounting for group output and input tax. When a taxable person leaves, the Authority restores or issues its individual tax registration number and treats it as a registrant immediately after exit. Directive 2 addresses who deals with adjustments that arise after that separation.^[2][3][1]

Implications for restructurings and carve-outs

Multinational groups should map pre-exit transactions to the entity that will remain registered, preserve the group returns and transaction evidence, and align later credit notes, price corrections and input-tax adjustments with that entity’s post-exit returns. The directive does not transfer every group liability to the departing member; its scope is the specified adjustments to that member’s own pre-exit supplies or expenses.^[1][2]