Why FTA Declines Tax Refunds - FTA Decision No. 9/2025

You know how every time we talk about your tax returns, I reassure you that the refund is simply still under processing? Well, things are changing now. Because the FTA Decision No. 9 of 2025 isn’t a minor tweak. It’s a fundamental change in how the Federal Tax Authority (FTA) handles your money.

The Date That Changed Everything: January 1, 2026

Here’s the headline - Starting January 1, 2026, just because you file for a refund doesn't mean you will get it. Especially if the FTA decides to take a look under your hood - otherwise known as a tax audit. Yes, a lot of my clients were frowning when they learned about this. But let me explain the ‘why’ behind this decision for you to understand it better.

This decision focuses on improving compliance. So, if you are waiting for your tax refund, under the new rules, if you are under audit, the FTA now has the legal power to look at that refund and simply say, "Not so fast."

This decision gives the FTA more authority to -

1. Examine Refund Claims in More Detail

Now, each claim is deeply investigated by the FTA. This means even little deviations can have an effect on your refund value.

2. Request Additional Supporting Documents

You now have to provide evidence for each number in addition to accurately filing your returns - invoices, contracts, payment proofs, logistics records - everything matters.

3. Adjust or Decline Refunds

If the FTA is not fully convinced, they can -

• Reduce the refund amount
• Hold it for further clarification
• Decline it entirely

The Six Conditions under which the FTA might Decline Tax refund requests (You must watch out for these)

I have broken down the six specific reasons due to which your refund might get declined.

1. Audit findings indicate potential significant tax liabilities

If the FTA is auditing you and finds evidence and information that you might owe a significant amount of tax or have significant tax liability, then they can now hold your refund hostage until that potential debt is settled.

2. Suspicion of Tax Evasion

If the FTA suspects that you are evading tax, your refund is gone. Worse, if your specific refund request is linked to goods caught up in a tax evasion chain (like a supplier two steps up the chain committing fraud), your refund can be killed.

3. The Outstanding tax Returns 

If you have any outstanding tax returns - any at all, whether for VAT, Corporate Tax, or excise - the FTA can decline your refund request until every single form is filed.

4. Failure to Provide Information

If the FTA sends you a query during an audit and you are busy and forget or delay in submitting the requested information within the specific timeline, then they can reject your residual refund claim.

5. The Uncooperative Stance

If the FTA feels that you aren't cooperating - maybe you've delayed sharing access to records during the audit - then they have valid grounds to block your refund.

What Should You Do Now?

First, do a health check on your old tax returns. Look back at 2021 and 2022. Do you have pending credits we haven't touched? We need to file those adjustments now. 

Second, build a strong documentation trail such that if someone from the FTA reviews your transactions months later, it should still make sense without explanation.

Third, vet your suppliers. If you claim a refund on an expense, but your supplier is dodgy or under investigation, you will feel the pain. Keep those tax invoices clean and verified.

Fourth, be ready for questions and respond quickly when they come. Delays in responses can slow down your refund even more.

My advice

The FTA aren't hunting compliant businesses; they are hunting the gaps. So, if you are a compliant business with good records, you will likely be fine. But if you get that notification of a tax audit, do not delay. Call us immediately. We need to respond quickly, cooperate fully, and clear any outstanding filings before asking for any refund.

How Can CDA Assist?

CDA has been providing tax consultancy services to its clients for more than a decade; hence, it has become one of the leading tax consultants in Dubai, UAE. The experts at CDA can help the businesses to understand the tax compliance requirements and also ensure meeting those requirements. Our personalized experts can assist in understanding the new updates in the regimes and implement the changes smoothly yet swiftly.

Buckle up for the FTA audits beforehand with 100% confidence with the expert guidance of CDA.

To know more about the tax consultancy services, connect with our team now!

You can refer: FTA Decision No. 9 of 2025

Mitesh Maithia

Tax Manager

Mitesh is a Tax Professional with expertise in direct, indirect, and international taxation, including transfer pricing, since 2018. Passionate about making complex tax matters simple, he shares insights to help businesses stay compliant and forward-looking.