Tax evasion investigations in the UAE

What the law means by tax evasion

The UAE’s Tax Procedures Law defines tax evasion as a person’s use of illegal means that results in less tax being due, tax not being paid, or a refund the person had no right to. The same rules apply across the federal taxes the Federal Tax Authority (FTA) administers, including VAT, excise tax and Corporate Tax.

This page sets out what the law says. Nothing on it assumes that any offence has been committed, and an FTA question about evasion is not a finding of it.

An error or a crime: where the line falls

Every tax evasion offence in Article 25 of the Tax Procedures Law (Federal Decree-Law No. 28 of 2022) turns on deliberate conduct. A mistake made without that intent belongs to the administrative regime. The FTA assesses the tax and imposes administrative penalties under Article 24, and no single administrative penalty may exceed twice the tax it relates to. Where a business finds an error itself, the route is a voluntary disclosure under Article 10. Our pages on FTA administrative penalties and voluntary disclosure cover that ground.

The law also says who must prove what. Under Article 51, the burden of proving that a tax return is accurate falls on the taxable person, but the burden of proof in cases of tax evasion falls on the FTA.

Avoidance is different again. The general anti-abuse rule in Article 50 of the Corporate Tax Law (Federal Decree-Law No. 47 of 2022) lets the FTA counteract a Corporate Tax advantage from an arrangement with no valid commercial or other non-fiscal reason, where obtaining an advantage at odds with the law’s purpose is one of its main purposes. It works through an assessment, and it is not one of the offences on this page.

The tax evasion offences

Article 25(2) makes it an offence to commit tax evasion by any of these acts:

• deliberately failing to pay any payable tax
• deliberately understating the actual value of the business or its revenues, or failing to consolidate related businesses, with the intent of staying below a registration threshold, tax rate or other tax threshold
• deliberately imposing and collecting amounts as tax without being registered
• deliberately decreasing the tax due, or participating in any form of tax evasion
• deliberately committing or omitting any other act that may constitute tax evasion under the Tax Procedures Law or the law imposing the tax

The punishment is a prison sentence and a fine of not less than the amount of tax evaded and not more than three times it, or either of the two. The fine has a floor as well as a ceiling, and both are measured against the tax evaded.

Deliberately not paying an administrative penalty that is due, unless it has been waived, is a separate offence under Article 25(3), punishable by a prison sentence and a fine of not less than the penalty and not more than three times it, or either. And Article 25(1) preserves any more severe penalty available under another law.

Offences against the FTA itself

Article 25(4) deals with conduct directed at the FTA rather than at the tax. A prison sentence and a fine of up to AED 1,000,000, or either, apply to anyone who:

• deliberately provides false information, data or incorrect documents to the FTA
• deliberately conceals or destroys documents, information, data or other material that they are required to keep and provide to the FTA
• steals documents or other material in the FTA’s possession, or deliberately misuses or destroys them
• deliberately prevents or hinders the FTA’s employees from performing their duties

Under Article 25(5), if any of those acts resulted in tax evasion, or facilitated or concealed it, the penalty for tax evasion in Article 25(2) applies. These offences are one reason why what is said and produced to the FTA needs care.

Four numbers that are easy to confuse

Beyond the fine

• The tax is still due. A criminal penalty does not remove the liability to pay the tax or the administrative penalties (Article 25(11)). Where evasion has caused a shortfall, the FTA can issue a tax assessment for it (Article 23).
• Participants. Anyone proven to have directly participated in, or caused, one of these crimes is punished under the general rules on criminal participation (Article 25(6)). Everyone who participated in a tax evasion crime is jointly and severally liable, with the person they participated with, for the tax and administrative penalties (Article 25(9)).
• Joint fines. Several accused fined in one judgment for one crime are jointly liable for the fine (Article 25(7)).
• Publication and confiscation. On conviction, the court may publish the judgment or a summary at the convicted person’s cost, where the FTA has asked the Public Prosecution for that (Article 25(10)), and may order the confiscation of seized items and funds (Article 26(2)).

Separately, the anti-money laundering law in force since October 2025, Federal Decree-Law No. 10 of 2025, includes the evasion of direct and indirect taxes in its definition of a predicate offence for money laundering.

How a criminal case begins

Under Article 26(1), a criminal case for a crime under the Tax Procedures Law or a tax law may only be initiated by a written request of the FTA’s Director General. The Director General, and officials appointed by the Minister of Justice in agreement with the Minister of Finance, have the capacity of judicial officers in proving these crimes (Article 52). Once a case has been initiated it is in the hands of the Public Prosecution and, if it goes further, the courts.

The FTA’s powers when evasion is suspected

An FTA audit normally starts with at least 10 business days’ notice (Article 16(2)). Article 16(4) allows a tax auditor to enter, without prior notice, any place where the person being audited conducts business, stores goods or keeps records, and to close it temporarily for up to 72 hours, in any of three cases:

• the FTA has serious grounds to believe the person is participating or involved in tax evasion, in respect of their own obligations or anyone else’s
• the FTA has serious grounds to believe that not closing the place temporarily will hinder the audit
• a person who was given notice of the audit tries to stop the auditor entering

In each case the auditor needs the prior written consent of the Director General or the person acting for him, and a Public Prosecution permit as well if the place is a residence (Article 16(5)). A closed place must reopen when the 72 hours expire, unless the FTA obtains a Public Prosecution permit, before they expire, to extend the closure for a similar period (Article 16(6)).

The auditor may take original records or copies, take samples of goods or other assets, and seize or keep them (Article 17). Under the Executive Regulation (Cabinet Decision No. 74 of 2023), the FTA must give a record of anything seized within 10 business days, or another period it specifies, and can refuse access to seized material where access would prejudice the audit, an investigation or criminal proceedings. Since 1 April 2026 it can also extend the period for which material is held, notifying the person where possible.

The audited person’s rights in Article 21, including copies of documents seized, continue. So does the duty to cooperate in Article 20, and deliberately hindering FTA employees is itself an offence under Article 25(4). The procedure generally is on our page on FTA tax audits.

How far back the FTA can go

The general rule in Article 46 is that the FTA cannot audit or assess a taxable person more than five years after the end of the tax period, subject to exceptions. In a case of tax evasion, the period is 15 years from the end of the tax period in which the evasion occurred. Where a person failed to register, it is 15 years from the date they should have registered.

The 15-year period is sometimes described as a 2026 change. It was in the Tax Procedures Law when it took effect on 1 March 2023. Federal Decree-Law No. 17 of 2025, in force from 1 January 2026, renumbered the clause (it is now Article 46(7)) but did not change it.

The longer period applies only in a case of tax evasion, where Article 51 puts the burden of proof on the FTA. These are the limits for an audit or an assessment; the time limits for criminal proceedings are a separate question, for the advocate.

Reconciliation

The Tax Procedures Law allows tax crimes to be settled by reconciliation. Once completed, a reconciliation ends the criminal case and cancels its consequences, and if it is reached while a sentence is being carried out, the Public Prosecution orders that execution be stayed (Article 27(5)).

It is described here because it is part of the law, not because it suits any particular case. It is not a right: the FTA, or the Public Prosecution after seeking the FTA’s opinion, decides whether to accept it. Whether to apply, and when, is a decision for the business with its UAE advocate, and we do not advise for or against it. The detail is in Articles 23 and 24 of the Executive Regulation.

Who applies, and to whom

• Before a criminal case is initiated, the person applies to the FTA on the FTA’s form, which includes an undertaking to pay the full amounts due. The FTA decides whether to accept. If it does, it issues a record of the reconciliation and the amount paid for it, signed by both parties, and hands over a copy once payment is made.
• Once a case has been initiated, the accused or convicted person applies, at any stage, to the competent federal public prosecution. The Public Prosecution seeks the FTA’s opinion first, and if the FTA does not respond within 20 business days that is treated as implicit approval. The record is issued after payment, signed by the prosecution member and the person, and approved by the Federal Attorney General. It records the charges, the tax and administrative penalties payable, and the percentage and value of the additional amount.

What it costs

Deliberate non-payment of an administrative penalty follows the tax evasion column. Where an offence against the FTA resulted in, facilitated or concealed tax evasion, the tax evasion amount applies instead of the fixed sum. Once a case has been initiated, several such acts committed for a single purpose and indivisibly linked are reconciled for a single AED 100,000 or AED 200,000, depending on the stage.

The Public Prosecution may allow the additional amount, but not the tax or penalties, to be paid over up to two years against sufficient guarantees. If the terms are not kept, the reconciliation is treated as never having taken place.

Supply chains and VAT input tax

Since 1 January 2026, a business can also be affected by evasion elsewhere in its supply chain. Article 54 bis of the VAT Law (Federal Decree-Law No. 8 of 2017, inserted by Federal Decree-Law No. 16 of 2025) lets the FTA reject a deduction of input tax where it establishes that the supply was part of a supply, or chain of supplies, related to tax evasion, and that the business knew of the link or should have known from the circumstances of the supply. A business that did not verify the validity and integrity of a supply before deducting the input tax is treated as having been required to know. The FTA’s guidance says the chain is not limited to direct suppliers and customers.

The verification steps are in FTA Decision No. 13 of 2026, in force from 1 October 2026: documented checks on the supplier, the payment terms and the circumstances of each supply. A rejected deduction is a decision on input tax, not a criminal charge, and an FTA decision can be challenged through reconsideration and the TDRC.

How we help

A criminal matter needs a UAE advocate. Criminal cases run through the Public Prosecution and the courts, and representation there is for advocates licensed in the UAE. Linx Tax Defence is not a law firm. If the FTA or the Public Prosecution has raised possible tax evasion, the advocate comes first.

Our part is the numbers and the civil tax position, alongside the advocate. In a matter like this the figures carry weight: the fine range, any reconciliation amount and the civil liability are all measured against the tax said to have been evaded.

• Rebuild the tax position for the periods in question from the business’s own records
• Quantify the tax actually at stake, period by period, with the working shown
• Set out which differences in the figures have a documented explanation and which do not
• Test any FTA assessment or administrative penalty against the Tax Procedures Law and the law imposing the tax
• Review the supplier and supply checks behind any input tax the FTA has questioned
• Prepare the figures to the advocate’s instructions and timetable

Further reading

• UAE tax disputes: an overview
• FTA tax audits: the procedure
• Voluntary disclosure to the FTA
• FTA administrative penalties
• Reconsideration requests and the TDRC
• Corporate Tax audits