The credit note follows you out of the VAT group

The sale sat on the group TRN. The credit note does not.

The customer has sent the goods back. You have already left the VAT group.

That original sale was declared on the group TRN, by the representative member, in a return you no longer sign. Until this summer nobody had written down whose return the later credit note belonged in. Some groups kept filing the adjustment. A departing company sometimes put it on the new TRN. A few did neither and waited for a query.

Directive on Tax Transactions No. 2 of 2026 settled the reporting. From 1 August 2026, if you leave a Tax Group and remain a Registrant, later adjustments on supplies you made or expenses you incurred before the exit go in your own Tax Returns. The original figures stay where they were, on the group return.

It is a Directive, not a Public Clarification. It binds you and it binds the FTA until it is replaced, withdrawn or overtaken by legislation. The power sits in Article 54 bis of Federal Decree-Law No. 28 of 2022 on Tax Procedures, inserted by Federal Decree-Law No. 17 of 2025. That Article 54 bis is not the same provision as Article 54 bis of the VAT Law, which is the input-tax denial rule. Always name the parent law.

Clause 1 is the whole rule

The instrument is three pages. Most of the first page is recitals.

Clause 1 is the rule. A Person who ceases to be a member of a Tax Group, but remains a Registrant, must make the adjustments in its own Tax Returns where the supplies or expenses were previously declared in the Tax Returns of the Tax Group. Those adjustments still have to sit inside the VAT Law and the Executive Regulation. The Directive does not invent a new kind of adjustment. It says whose return they occupy.

What those adjustments include sits in the next clause: reductions in the value of Taxable Supplies the group already declared, and reductions in the value of Taxable Expenses on which Input Tax was recovered through the group returns.

Evidence is the third clause. You keep the documents that show the adjustment relates to a supply or expense the group previously declared.

Publication is the last. Clause 4 puts it in the Official Gazette and sets the date: 1 August 2026. The PDF is signed 8 July 2026. The FTA register lists 10 July as the issue and publish date.

That is the entire instrument.

Leaving does not take you off the register

Under Article 14 of Federal Decree-Law No. 8 of 2017, two or more related persons with an establishment in the UAE can register as a Tax Group. One TRN. One return.

Article 12 of Cabinet Decision No. 52 of 2017 is what that actually does to the filing. Any business carried on by a member is treated as carried on by the representative member. Supplies between members may be disregarded. Output tax charged by a member, and input tax incurred by a member, are both treated as the representative member's. Article 12(2) then says all members remain personally and jointly liable for any Payable Tax of the representative member.

Removing a member is a group amendment. The representative member files it under Article 11. The FTA may accept the change from the first day of the next tax period, or from any other date it determines.

Article 15(5) is the part people miss. Where a Taxable Person is no longer a member of a Tax Group, the Authority issues a new individual TRN or reactivates the old one, and treats that person as a Registrant immediately after it left. You do not apply to stay registered. You already are.

If your own supplies then fall under the deregistration tests, that is a different clock, and it is the 20-business-day deregistration window.

Article 15(2)(a), as amended by Cabinet Decision No. 100 of 2024, also requires the Authority to remove a member that has ceased to make Taxable Supplies. The representative member has 20 business days to notify the FTA once a member is no longer eligible.

The Directive only covers the case where you leave and remain registered. After Article 15(5), that is the default. The gap it closes is the tail. A return of goods or a supplier credit months after the invoice has no clean home once you are out, unless someone writes one down.

Worked numbers on a 1 August exit

Take a company we will call Gulf Parts LLC. The FTA set its exit from Al Noor VAT Group as 1 August 2026. It kept an individual registration from that morning.

In May, while still grouped, it sold AED 420,000 of parts. Output tax of AED 21,000 sat in the group second-quarter return.

On 18 August the contractor returned AED 84,000 of that order. Under Article 61(1)(d) of the VAT Law, goods returned with consideration returned is an instance that requires an output tax adjustment. Article 62(2) says you issue a Tax Credit Note within 14 days of that event. Five percent of AED 84,000 is AED 4,200.

That AED 4,200 comes off the Gulf Parts return. Not Al Noor.

There is a second line. In June the group recovered AED 4,800 of input tax on AED 96,000 of steel Gulf Parts bought. On 12 September the mill issued a credit of AED 16,000. Input tax to repay: AED 800. That clawback also sits on the Gulf Parts return.

None of this is a correction of an error. The original May sale and the June purchase were right when they were filed. The later events changed the values.

If both adjustments are posted to the group return after 1 August, Al Noor takes an AED 3,400 net reduction it should not have, and Gulf Parts overpays the same amount.

The mistake, and the cases the Directive skips

In our experience the credit note goes back to the former representative member. They drop it into the next group return because that is where the invoice lived, or they refuse it and the document sits in a shared inbox until the period has closed. After 1 August both of those are the wrong move for a still-registered former member.

An error in the original group filing is a different route. Article 61(1)(e) covers tax charged in error. If the tax difference is above AED 10,000, that is a voluntary disclosure on the return that contained the error, which is the group return. The Directive is for later commercial adjustments, not for rewriting a figure that was wrong on day one.

One thing the instrument leaves open. Clause 2 names reductions. It does not name increases.

Article 62(1) of the VAT Law still requires a new Tax Invoice where output tax due exceeds what was charged. Whether that extra invoice, raised after you have left, follows you in the same way is not written down. We treat it as following the person who made the supply, because that is the logic of Clause 1. It is not what Clause 2 says. Until the FTA applies it in an assessment, that reading is a working position, not a settled one.

Bad debt relief under Article 64 is another reduction in output tax. The Directive does not name it. A write-off of a pre-exit debt after you leave looks like Clause 1, and looks like a reduction under Clause 2. We would put it on the departing member return. The FTA has not said so. Capital Assets Scheme adjustments under Article 60 are silent in the Directive as well.

The paper that proves the link

Clause 3 is short because the FTA will reconstruct the transaction from what you kept.

You need the original tax invoice. You need the Tax Credit Note issued under Article 70. You need the page of the group return, or the workings, that shows the supply or the expense was declared there. You need the EmaraTax confirmation of the exit date. If the adjustment is an input clawback, you need the supplier credit and proof the group recovered the input.

Those records run on the ordinary retention rules. Five years. Fifteen for real estate.

A credit note that cannot be tied back to the group declaration is just a document. The reduction will not survive a review.

Failing to issue the credit note at all is a separate penalty. Cabinet Decision No. 129 of 2025 charges AED 5,000 per tax invoice or credit note that is not issued. Article 62(2) gives you 14 days from the event.

Where the adjustment sits on the form is the same place a credit note always sits, on your own VAT201, not on a residual group filing.

Leaving does not end the old liability

The Directive moves the reporting. It does not cancel the debt that accrued while you were inside.

If the FTA later finds the group underpaid for a period you were a member, Article 12(2) of the Executive Regulation still has you personally and jointly liable for the representative member's Payable Tax. Leaving does not wipe the period you sat in.

That is why the exit file should include a copy of every group return that covered your supplies, not only the last one.

If the group has been dissolved, the obligation does not dissolve with it. A still-registered former member still has to put the later adjustment in its own return. A former member that is no longer registered is outside Clause 1, and the closing position is a deregistration problem.

Late filing of the return that should have carried the adjustment is the ordinary penalty under Cabinet Decision No. 129 of 2025: AED 1,000 the first time, AED 2,000 if it happens again inside 24 months. Unpaid tax on a missed clawback runs at 14% a year, charged monthly, from 14 April 2026.

A short checklist

If you have left a group since the summer, or you are about to, an afternoon of filing settles the open items.

1. Pull the EmaraTax amendment and write down the FTA effective exit date.
2. Confirm the individual TRN the Authority issued or reactivated under Article 15(5). That is the return the later adjustments belong on.
3. List every invoice the group declared for you that is still live: unpaid, under query, or inside a returns window.
4. List every purchase the group recovered input tax on that a supplier might still credit.
5. For each later credit note or supplier credit, file the adjustment on your own return for the period the event happened, with the group invoice and the group return page attached to the working paper.
6. Do not send those documents back to the representative member to put on the group TRN.
7. If the original group figure was wrong, stop and use a voluntary disclosure on the group instead.

Then keep filing your own returns. The group filing is no longer yours.