The UAE Federal Tax Authority (FTA) introduced a new category of guidance in 2026 known as Directives on Tax Transactions. The first in this series, Directive on Tax Transactions No. 1 of 2026 for Value Added Tax on Judicial Expert Services, addresses the VAT treatment of services provided by judicial and arbitration experts in the UAE.
Issued on 8 July 2026, the Directive clarifies whether fees received by experts appointed by UAE courts, judicial authorities, and arbitration centres are subject to VAT. It confirms the VAT treatment of Judicial Expert Services and sets out the tax obligations that may apply to the experts providing these services.
In this article, we explain what FTA Directive No. 1 of 2026 is, who it applies to, why Judicial Expert Services are treated as Taxable Supplies, and what judicial experts operating in the UAE need to do to stay compliant.
Why the FTA Clarified VAT on Judicial Expert Services in the UAE
Judicial and arbitration experts play a central role in UAE litigation and arbitration. Courts and arbitral tribunals frequently need independent, specialised opinions on matters such as engineering defects, financial losses, valuation disputes, forensic accounting, medical causation, and construction delays. To meet this need, the UAE judicial system maintains official rosters of accredited experts. When a dispute requires technical input beyond the expertise of the judge or arbitrator, a suitably qualified person is appointed from the relevant roster.
Before Directive No. 1 of 2026, there was no single, authoritative statement addressing whether the fees these experts receive fall within the scope of VAT under Federal Decree-Law No. 8 of 2017 on Value Added Tax (the “VAT Law”). Several open questions circulated among practitioners and tax advisors:
- Does the fact that an expert is appointed by a court, rather than engaged commercially by a client, take the arrangement outside the definition of a “supply of services”?
- Does the involvement of a court or judicial authority as the appointing body change the nature of the payment from “consideration” into something else, such as an honorarium or a statutory fee?
- Where the litigant paying the expert’s fee is a government entity, does that alter the VAT treatment?
- At what point does a judicial expert become obliged to register for VAT?
These questions mattered because experts, law firms instructing them, and the courts and litigants who ultimately bear the cost all needed certainty on whether VAT should be charged, disclosed, and accounted for. Directive No. 1 of 2026 closes these gaps.
Also check: Court Expert Witness Services
What Is FTA Directive No. 1 of 2026 on Judicial Expert Services?
The Directive applies to a natural or legal person who is registered on the relevant judicial or arbitration expert roster and who is subsequently appointed by a competent court, judicial authority, or arbitration centre to provide expert services in connection with a dispute. This includes experts appointed to prepare technical reports, attend hearings, respond to clarification requests from the court or tribunal, and otherwise assist in resolving matters that require specialised knowledge.
The core conclusions of the Directive can be summarised as follows:
Judicial Expert Services Are Supplies Made in the Course of Business
The Directive confirms that when a roster-registered expert is appointed by a court or arbitration body and performs the assigned work, this activity is regarded as being carried out in the course of conducting a business in the UAE, even though the appointment originates from a judicial process rather than a private commercial engagement.
These Supplies Are Taxable Supplies Under the VAT Law
Because the services are treated as business activity, they fall within the general scope of taxable supplies of services under Federal Decree-Law No. 8 of 2017, unless a specific exemption applies (which, in the case of judicial expert services, it does not).
The Fee Received by the Expert Is Consideration for a Supply of Services
Whatever the fee is called in practice, an expert fee, a court-ordered fee, or a professional honorarium, the Directive makes clear that it constitutes consideration paid in return for a supply of services for VAT purposes. The judicial nature of the appointment process does not remove the payment from the scope of “consideration” as defined in the VAT Law.
VAT Registration Obligations Apply in the Normal Way
Judicial experts must assess their taxable supplies and comply with VAT registration requirements where the applicable conditions under the VAT Law and Executive Regulation are met. There is no special exemption or carve-out from registration simply because the work arises from a court appointment.
Payment by a Government Entity Does Not Change the VAT Treatment
This is one of the most practically important clarifications in the Directive. Many judicial expert fees are ultimately paid, reimbursed, or facilitated through a government entity, for example, a ministry, a court’s own administrative fund, or another public body involved in the judicial process.
The Directive expressly states that the identity of the payer does not alter the character of the transaction. A payment does not become outside the scope of VAT, exempt, or zero-rated merely because a government body is the source of funds. The test remains whether a taxable supply of services has been made in exchange for consideration, and it has.
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Why Are Judicial Expert Services Taxable Supplies Under UAE VAT?
To understand why the FTA reached this conclusion, it helps to revisit the basic architecture of UAE VAT law.
What Is a Supply of Services Under UAE VAT?
Under the VAT Law, a supply of services occurs whenever a service is provided for consideration by a person conducting business, and that service is not specifically excluded or exempted. The fact that the initiating trigger for the engagement is a judicial appointment rather than a private contract does not remove the underlying reality: the expert performs professional work, investigating facts, forming an opinion, preparing a written report, or giving oral testimony, and is paid for doing so.
When Are Judicial Expert Services Considered a Business Activity?
A person is generally regarded as conducting a business in the UAE where they carry out an activity continuously and independently, whether for profit or otherwise, and whether the activity is conducted by a natural person or a legal entity. A professional expert who accepts appointments from the judicial or arbitration expert roster on an ongoing basis is exercising a professional activity of exactly this kind. The judicial or quasi-judicial context of the appointment does not convert a professional service into something outside the definition of “business.”
Why Are Judicial Expert Fees Treated as Consideration?
VAT law generally does not concern itself with who pays for a supply, only with whether a supply has been made and what has been paid or is payable in return. A litigant, a law firm on behalf of a client, a court-administered fund, or a government ministry can all be the source of a payment; the VAT analysis is the same in each case. This is consistent with the Directive’s position that payment via a government channel does not shift the transaction out of scope.
Does Payment by a Government Entity Change the VAT Treatment?
UAE VAT law does provide specific exemptions and reliefs in defined areas, for example, certain financial services, residential real estate, and a narrow set of activities carried out by government entities acting in a sovereign capacity where no competitor exists in the private sector. Judicial expert services provided by individually appointed professionals do not fall within any of these carve-outs.
The expert is not the government entity exercising a sovereign function; the expert is an independent professional supplying a service that the government entity (or another paying party) is settling on behalf of the judicial process.
VAT Registration and Compliance Requirements for Judicial Experts
The Directive has immediate, practical consequences for anyone registered on a judicial or arbitration expert roster in the UAE.
Assess Your VAT Registration Status
Every expert should review their cumulative taxable supplies over the preceding 12 months, and their expected taxable supplies over the next 30 days, against the mandatory VAT registration threshold.
Experts below the mandatory threshold but above the voluntary threshold should also consider whether voluntary registration makes commercial sense, particularly if it allows recovery of input VAT on business expenses such as office costs, professional subscriptions, and technology used to prepare reports.
Update Your Invoicing Practices
Once registered, an expert must issue compliant tax invoices for judicial expert fees, showing the VAT charged at the standard rate, the Tax Registration Number (TRN), and the other mandatory particulars required under the VAT Law and its Executive Regulations. This applies whether the invoice is addressed to a private litigant, a law firm, an arbitration centre, or a government entity.
Review Previous VAT Treatment
Experts who have previously treated their court-appointed fees as outside the scope of VAT, or who have not billed VAT on the basis that a government entity was involved, should revisit those positions in light of the Directive and consider whether any correction, disclosure, or voluntary compliance step is needed. Because Directives are binding guidance on how existing law applies, they generally do not create new law but rather confirm how the FTA expects existing provisions to be interpreted, which can have implications for prior periods.
Coordinate With Instructing Parties
Courts, arbitration centres, law firms, and government departments that engage judicial experts should also be aware of this Directive, since it affects how expert fees are budgeted, invoiced, and reimbursed. Where a government entity is expected to settle or facilitate an expert’s fee, that entity should not assume the payment falls outside VAT.
Maintain Proper Records
As with any taxable person, judicial experts must keep records of their supplies, tax invoices, and VAT returns for the period required under UAE tax law, and should be prepared to demonstrate the basis for their VAT treatment if reviewed by the FTA.
See also: Tax Agent in Dubai, UAE
Key Takeaways on VAT for Judicial Expert Services in the UAE
- FTA Directive No. 1 of 2026 is binding guidance confirming the VAT treatment of services supplied by natural or legal persons registered on a judicial or arbitration expert roster and appointed by a competent court or judicial authority
- Judicial expert services are treated as supplies made in the course of business and are therefore Taxable Supplies under the UAE VAT Law
- Fees paid to judicial experts constitute consideration for a supply of services, regardless of how the fee is labelled
- Judicial experts must assess and, where required, complete VAT registration, and must comply with ongoing invoicing and reporting obligations
- Payment by a Government Entity does not change the VAT treatment of the underlying supply; the transaction remains taxable in the same way as if a private party had paid
Final Thoughts
Directive No. 1 of 2026 clarifies the VAT treatment of judicial and arbitration expert services in the UAE. By confirming that court-appointed expert work is a taxable business activity, that fees represent consideration, and that government involvement in payment does not change that outcome, the FTA has provided experts, law firms, courts, and arbitration centres with greater clarity on the applicable VAT treatment.
Given that non-compliance with VAT registration and invoicing obligations can expose experts to administrative penalties, anyone active on a UAE judicial or arbitration expert roster should review their current VAT position promptly and, where in doubt, seek advice from a qualified UAE tax professional to ensure full compliance with the Directive.
Related: VAT Consultants in UAE
Frequently Asked Questions (FAQs)
Does FTA Directive No. 1 of 2026 create a new VAT rule?
Are all court-appointed experts required to charge VAT?
Does it matter if a government entity pays the expert's fee?
What should experts who previously treated their fees as outside VAT scope do?
What records must judicial experts keep for VAT purposes?
Need Expert Advice?
Contact the team at Farahat & Co. for professional support and expert insights for businesses operating in the UAE.
How Farahat & Co. Can Help
Farahat & Co. supports judicial and arbitration experts in assessing their VAT registration position, updating invoicing practices for court-appointed fees, and reviewing prior VAT treatment in light of Directive No. 1 of 2026.
Contact Farahat & Co. today to discuss your VAT compliance requirements as a judicial or arbitration expert.
