Every seizure raises an immediate question: what happens to the goods once they are taken into custody? Whether it involves confiscated cigarette cartons, unregistered vaping devices or sweetened beverages from a non-compliant distributor, the goods do not simply disappear after the Federal Tax Authority (FTA) seizes them. They must be stored, secured, documented and ultimately disposed of through the appropriate process.
FTA Decision No. 7 of 2026 on Procedures for the Disposal of Seized and Abandoned Goods establishes a clear framework for managing this process. Issued on 11 June 2026 and effective from 30 July 2026, the Decision outlines how the FTA handles goods seized under UAE tax legislation, as well as goods that remain unclaimed or are considered abandoned.
The framework covers the full journey of the goods, from the point they enter FTA custody through to their storage, disposal or sale by public auction, and the distribution of any proceeds.
For businesses operating in excise-taxed sectors, including tobacco, e-cigarettes, energy drinks and sweetened beverages, understanding these procedures is important. The Decision provides greater clarity on what may happen following enforcement action, how seized goods are managed and stored, and the possible outcomes when goods are ultimately disposed of or sold.
Why the UAE Needed a Formal Disposal Framework?
Tax enforcement across the UAE has become increasingly active, bringing a practical challenge into focus: what happens to goods once they are seized?
Large quantities of non-compliant excise goods can require secure storage and careful management while the relevant procedures are completed. Every shipment or batch taken into custody must be accounted for, protected and monitored. For certain goods, prolonged storage can also create additional challenges, from rising storage costs and loss of value to potential safety or handling risks.
But efficient inventory management is only one side of the process. The owners of seized goods may still have legal rights, meaning that disposal cannot simply be treated as an automatic outcome of seizure. The process must follow the procedures established under the relevant UAE tax legislation.
FTA Decision No. 7 of 2026 on Procedures for the Disposal of Seized and Abandoned Goods provides the framework for managing this balance. It sets out the procedures for handling goods in FTA custody, including their management, disposal and, where applicable, sale. The aim is to give the FTA a structured process for dealing with seized or abandoned goods while ensuring that the relevant procedures and safeguards are followed.
How the FTA Monitors Impounded Merchandise
The foundation of the Decision is disciplined custody. Before any question of sale or disposal arises, the FTA is expected to maintain a clear, verifiable record of exactly what it holds, where, and in what condition.
Stocktaking Records
Every seizure is expected to be documented at the point of confiscation: quantity, description, and condition, and re-verified at intervals during storage. This creates a paper trail that protects both sides: the FTA against claims of mishandling, and the owner against the risk of goods quietly disappearing or being misdescribed.
Movement Records
Seized goods are not always held in a single location. Where goods are transferred between storage facilities, that movement is expected to be logged, preserving an unbroken chain of custody from seizure through to final disposal or release.
Condition Monitoring
Certain goods demand closer attention than others. Perishable items, goods prone to shortage or leakage, and goods that could pose a hazard to other stored inventory or to the facility itself are expected to be actively monitored, not simply left in storage and checked on periodically. This ongoing monitoring is what ultimately feeds into the decision on whether early disposal is warranted.
Also check: Excise Tax Services in UAE
Need Expert Advice?
Contact the team at Farahat & Co. for professional support and expert insights for businesses operating in the UAE.
FTA Rules for the Sale of Seized and Abandoned Goods
Not every seizure can follow the same disposal timeline. While certain goods may remain in custody pending the resolution of an objection, investigation or other legal proceedings, others may require earlier disposal due to their nature or condition.
The Decision provides for the disposal of goods where continued storage may result in deterioration, loss, shortage or damage, or where the goods may pose a risk to other goods or the place in which they are stored. This may include:
- Perishable goods that are liable to spoil or lose their value
- Goods subject to shortage or leakage, where their quantity or condition may deteriorate during storage
- Goods that may cause damage or pose a risk to other goods, storage facilities or the surrounding environment
In such cases, the FTA may proceed with the relevant disposal procedures without retaining the goods until the underlying matter has been finally determined, subject to the conditions and approvals prescribed under the Decision.
Where the seized goods are connected to a criminal case or have been referred to the Public Prosecution or the competent court, the disposal of those goods is subject to the approval of the relevant authority. This ensures that the disposal process does not interfere with ongoing criminal or judicial proceedings.
Abandoned goods are treated separately. Where goods remain unclaimed and are considered abandoned in accordance with the applicable procedures, the FTA may proceed with their disposal after fulfilling the relevant requirements set out in the Decision.
Understanding the FTA Public Auction Process
Where a sale is authorised, the Decision provides for a structured public auction process, with procedures intended to ensure transparency, appropriate valuation and the protection of the rights of any identifiable owner.
The process generally follows a recognisable sequence:
1. Notification of the Owner
Where the owner is known and can be contacted, the owner may be notified of the proposed auction in accordance with the applicable procedures. This provides an opportunity to address any outstanding matters before the sale proceeds.
2. Appointment of a Licensed Auction Service Provider
The FTA may appoint a duly licensed auction service provider to conduct the sale, ensuring that the auction is administered through an established and regulated process.
3. Setting a Reserve Price
A reserve price is determined in accordance with the applicable valuation procedures, establishing the minimum acceptable price for the goods offered at auction.
4. Payment, Delivery, and Sale Certificates
Following acceptance of the winning bid, the purchaser must complete payment and comply with the applicable delivery requirements. A sale certificate may then be issued to document the transaction and sale.
5. Export Requirements for Non-Marketable Goods
Certain goods may not be eligible for sale or circulation within the UAE domestic market, including excise goods that do not meet applicable Digital Tax Stamp requirements. Where applicable, the purchaser may therefore be required to export the goods rather than place them on the UAE market.
This closes an obvious loophole: without an export requirement, a public auction could otherwise become an unintended backdoor for non-compliant products to re-enter local circulation.
How the FTA Allocates Auction Proceeds?
The sale is not the final stage; the Decision also establishes how the resulting proceeds are to be allocated. The Decision establishes a clear order of priority for distributing auction proceeds:
- Sale, storage, and movement costs are recovered first. This covers the practical expenses the FTA incurred in holding, transporting, and auctioning the goods.
- Outstanding tax owed on the goods is settled next, addressing the core reason the goods were subject to enforcement in the first place.
- Administrative penalties connected to the seizure are then deducted from whatever remains.
- Any residual balance is returned to the goods’ owner, where one has been identified and has a legitimate claim, ensuring the FTA’s disposal power isn’t used to extract more value than the state is actually owed.
How Do These Rules Apply in Practice?
For businesses operating in excise-taxed sectors, FTA Decision No. 7 of 2026 demonstrates that a seizure is not an isolated enforcement measure. It can trigger a defined process governing the custody, disposal and potential sale of the affected goods.
Understanding that process can help businesses assess the risks associated with non-compliance and respond appropriately when enforcement action occurs.
- Perishable or hazardous stock moves fast. If goods fall into a category subject to accelerated disposal, businesses should not assume there will be time to resolve a dispute before a sale takes place.
- Businesses should treat any notification from the FTA as requiring prompt attention. Where the FTA is required to notify an owner ahead of an auction, that notice is often the last practical chance to intervene before the goods are sold.
- Proceeds don’t automatically return to the owner in full. Storage costs, unpaid tax, and administrative penalties are deducted first, so a business hoping to recover value from seized goods should factor in that only a net surplus, if any, comes back.
- Export-only goods stay export-only, even at auction. Businesses cannot expect non-compliant goods to re-enter the local market simply because they changed hands through a public sale.
Final Thoughts
FTA Decision No. 7 of 2026 establishes a clear regulatory framework for the management and disposal of goods seized or abandoned under UAE tax legislation. The Decision addresses what happens to seized goods in the UAE once they come into the custody of the Federal Tax Authority (FTA), including their storage, handling, disposal and, where applicable, sale through public auction.
It also sets out procedures concerning abandoned goods in the UAE, providing a defined process for determining how unclaimed goods may be dealt with and disposed of in accordance with the applicable requirements.
For businesses operating in sectors subject to UAE tax enforcement, understanding the rules governing tax seized goods in the UAE is increasingly important. The Decision provides greater procedural clarity while enabling the FTA to manage goods in its custody in an organised and accountable manner. At the same time, it establishes procedures intended to safeguard the rights and legitimate interests of owners throughout the disposal process, including where goods are ultimately sold and proceeds are generated.
See also: Tax Agent in Dubai, UAE
Frequently Asked Questions (FAQs)
What does FTA Decision No. 7 of 2026 cover?
Can the FTA dispose of seized goods before a dispute is resolved?
What happens to the proceeds of a public auction?
Can auctioned goods that failed Digital Tax Stamp requirements be sold in the UAE market?
What happens if seized goods are linked to a criminal case?
How are abandoned goods treated differently from seized goods?
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 businesses in excise-taxed sectors with understanding their obligations following enforcement action, responding to FTA notifications, and assessing their position when goods are seized, held, or scheduled for disposal or auction.
Contact Farahat & Co. today to discuss your excise tax compliance and enforcement-related requirements.
