15 July 2026 · The Core Rule
VAT Adjustment After Leaving a Tax Group
Under FTA Directive on Tax Transactions No. 2 of 2026 — a binding directive published on the FTA legislation register on 10 July 2026 and effective from 1 August 2026 — a person who ceases to be a member of a UAE VAT group but continues to be VAT-registered must account for any required output tax or input tax adjustment relating to pre-exit taxable supplies or expenses in their own VAT return. This applies even though the original transactions were declared under the group's single TRN and reported in the group's consolidated return. The Directive does not create a new tax — it fixes which return a later adjustment belongs in once you and the group have parted ways. So a credit note on a supply the group reported, or a clawback of input tax the group recovered, is now your entry to make, on your own return, for as long as you remain registered.
Exiloz Management & Tax Consultant · Dubai-based FTA-focused advisory · VAT, corporate tax & accounting
The adjustment follows the person
The Directive attaches the post-exit adjustment to the taxpayer who made the transaction, not to the group that once reported it. As long as you stay VAT-registered after leaving, output tax reductions and input tax clawbacks on your pre-exit supplies and costs are your entries — reported in your own return in the tax period the adjustment event occurs.
- Applies the moment you leave but stay registered.
- Covers both output tax and input tax adjustments.
- Reported in your own VAT return, not the group's.
- Applies even where the group originally declared the supply.
- Runs for as long as you remain registered.
- Effective for adjustments from 1 August 2026.
Why the group return can't take it
In a VAT group only the representative member files, and once you leave you are no longer inside that consolidated return. The group may have added or dropped members, or dissolved entirely. Putting a post-exit adjustment back through the group would misstate a return that no longer represents you — so the Directive routes it to the person who actually made and now unwinds the transaction.
- The group files one consolidated return only.
- Leaving detaches you from that return.
- The group may have changed shape or dissolved.
- You are the person who made the underlying supply.
- So you unwind it in your own return.
- This removes the old ambiguity over timing.
Spotting the adjustments that will follow you
The adjustments that land in your return are the ones triggered after your exit date on transactions from before it: returned goods, post-sale discounts, cancelled contracts, supplier credit notes and bad debts. A clean exit reconciliation lists these open items so none is missed and none is wrongly pushed back to the group.
- List open invoices and pending credit notes at exit.
- Flag orders and contracts that may reverse.
- Note supplier costs that may be credited.
- Fix your exact exit date from EmaraTax.
- Match each later event to the correct return.
- Keep the invoice and credit note together.
Related guides
Frequently Asked Questions
For the core rule.
Whose return does the adjustment go in?
Yours, if you have left the group but remain VAT-registered. The Directive routes the post-exit output or input tax adjustment to your own return, in the tax period the adjustment event happens.
Does it matter that the group reported the original supply?
No. The Directive expressly applies even where the original transaction was declared in the group's returns — the later adjustment still belongs to you.
When did this take effect?
The Directive was published on the FTA legislation register on 10 July 2026 and is effective from 1 August 2026, so it governs adjustments arising on or after that date.
Is this a new VAT charge?
No. It is a binding directive that directs how the existing adjustment rules apply to a member leaving a group; it does not create a new tax or rate.
Can Exiloz confirm which return applies?
Yes. We map each adjustment to the correct return around your exit date and prepare the supporting records the FTA expects.
Left a VAT group this year?
Exiloz reports each post-exit adjustment in the correct return.