Introduction
On 11 June 2026, the Chairman of the Board of Directors of the Federal Tax Authority (“FTA”) issued Decision No. 7 of 2026 on the Procedures for the Disposal of Seized and Abandoned Goods (the “Decision”), which takes effect as of its publication in the Official Gazette on 30 July 2026.
The Decision runs to seven articles and is, on its face, an administrative instrument. Its significance is greater than its length suggests, as it completes a chain of delegated authority that has existed since 2022 but had not previously been exercised in published form, in an area where the FTA acts unilaterally, before any conviction, and against a compressed timeline.
This article examines where the Decision sits in the legislative framework, the goods it applies to, the Committee it creates, the conditions for sale, and the order in which proceeds are applied.
The Legislative Chain: From Article 26 to Decision No. 7
The Decision is the third layer of a structure beginning with Article 26 of Federal Decree-Law No. 28 of 2022 on Tax Procedures, and its amendments (the “TP Law”). Clause 1 provides that a criminal case may only be initiated by written request of the Director General, and Clause 2 permits the court, upon conviction, to order confiscation of seized items and funds without prejudice to the rights of bona fide third parties.
Clause 3 is the source of the present Decision, and its opening words repay attention. It provides that notwithstanding Clause 2, the FTA may conduct procedures for storing, moving, attaching, disposing of, destroying, recycling or selling seized items where such items are perishable, subject to shortage or leakage, or are in a condition that might endanger the safety of other goods or facilities they are in, and may deal with abandoned goods. Confiscation under Clause 2 is a judicial remedy following conviction; the power in Clause 3 is administrative and operates independently of, and in advance of, any criminal outcome. The justification is practical rather than punitive, since perishable goods cannot be warehoused pending the conclusion of proceedings without losing the value the seizure was intended to preserve.
The balance is struck by the remainder of Article 26: Clause 4 preserves the taxpayer’s liability for Payable Tax and Administrative Penalties, Clause 5 preserves the owner’s right to request the return of the items upon settlement of the full Tax, Administrative Penalties and expenses, and Clause 6 excludes FTA liability for damage.
Clause 7 requires the Executive Regulation to specify the implementing procedures, which was done by Article 22 of Cabinet Decision No. 74 of 2023 (the “Executive Regulation”). Article 22 in turn contains two express delegations back to the FTA: sales are to be conducted by public auction “in accordance with the procedures specified by the Authority” (Article 22(3)), and the FTA “may prescribe procedures and controls for storage and move of seized goods” (Article 22(6)). Decision No. 7 exercises both in a single instrument.
Scope and the Storage Regime
Article 2 confines the Decision to seized or abandoned goods that are perishable, subject to shortage or leakage, or in a condition that might endanger the safety of other goods or the facilities they are in. Goods outside that category remain governed by the general seizure provisions of the TP Law. Characterisation is therefore the gateway determination, and it is the Committee that identifies naturally perishable goods.
Article 3 sets the storage and movement standards: approved storage conditions and locations, transport in designated government vehicles or by an appointed service provider, stocktaking records taken before, during and after movement and reconciled against inventory, and condition, monitoring and access logs. The stated purpose is instructive – these conditions must preserve the condition, quality and quantity of the goods so as to ensure the possibility of returning them to their owner, or of preserving them for valuation and sale – so the standard is framed by reference to the owner’s restitution right, not merely the FTA’s recovery interest.
A New Decision-Maker: The Committee
The Committee is formed by decision of the FTA’s Director General and identifies naturally perishable goods, makes recommendations on them, and oversees their Disposition – defined broadly to cover sale, storage, movement, destruction or disposal. It is the operative decision-maker throughout, as:
- it decides whether goods may be sold (Article 4(1)),
- the auction follows its decision (Article 5(1)),
- it sets the auction criteria including the reserve price, method of sale, payment and delivery provisions, participation rules and announcement mechanism (Article 5(3)), and
- it issues the sale certificate evidencing transfer of ownership (Article 5(4)).
The Decision does not address the Committee’s composition or quorum, nor whether a decision to sell may be challenged through the reconsideration and objection machinery of the TP Law. The potential view is that a Committee decision is a decision of the FTA and should in principle be open to challenge, but the practical difficulty is timing: where goods are perishable the interval between decision and auction may be measured in days, and once the goods are handed over and a certificate issued, ownership has passed to the buyer and the owner’s remedy may become necessarily monetary.
Conditions for Sale: Article 4
Article 4(1) permits a sale pursuant to a decision of the Committee, subject to four cumulative conditions:
- The category condition: the goods are perishable, subject to shortage or leakage, or in a condition that might endanger the facility they are in or its surrounding environment.
- The owner condition: the owner or his representative fails to request retrieval or fails to settle the full Tax and Administrative Penalties due together with any other related expenses, or has exhausted or waived those rights.
- The residual value condition: the goods have not ceased to have value by reason of their perishable or deteriorating nature.
- The legality condition: the goods are of a type legally permitted to be sold and circulated within the UAE, except for those sold for export purposes.
The second condition is where the practical pressure lies, and must be read with Article 22(5) of the Executive Regulation: an owner seeking recovery must notify the FTA within five business days of being notified of the seizure, and evidence both ownership and payment of all Tax, Administrative Penalties and associated expenses. Payment comes first, recovery follows, and where the goods are perishable that window is not a formality but the whole of the opportunity.
The fourth condition also merits attention. Article 22(5) permits recovery only where the goods are of a kind permitted to be sold and circulated in the UAE; the Decision further allows goods that cannot lawfully be sold locally to be realised by sale for export, with Article 5(5) requiring the buyer to furnish proof of export. That preserves value which would otherwise be destroyed and, since proceeds are applied against the taxpayer’s liabilities, operates in the taxpayer’s economic favour.
Article 4(2) contains an important safeguard: where goods are seized for investigation or are connected to pending legal proceedings, the FTA must obtain the approval of the public prosecution or the competent court before commencing sale procedures. This preserves the evidentiary function of the items, respects the court’s confiscation jurisdiction, and indirectly protects the bona fide third parties whose rights Article 26(2) reserves.
The Public Auction: Article 5
Article 5(2) requires the owner or his representative to be notified of the sale decision, the reasons for it and its date.
The auction is outsourced to a licensed auction service provider engaged by the FTA, selling against the Committee’s criteria. Among those, the reserve price is the principal economic protection available to the owner, since any surplus is credited back under Article 6. On completion, the goods are handed over and a sale certificate issued, and Article 5(4) provides that the FTA bears no subsequent liability for their use or circulation. Bidders should read that alongside Article 5(5), as goods are acquired without the warranties that would ordinarily accompany a sale, and where a lot is sold for export, the burden of establishing export sits with the buyer.
Allocation of Sale Proceeds: Article 6
Article 6 sets out a waterfall that applies once the auction is complete:
| Order | Application of proceeds | Observation |
| 1 | Costs of the sale at public auction and any costs of storage or movement. | The cost of the seizure is borne by the taxpayer and ranks ahead of the tax itself. |
| 2 | Tax due from the taxpayer from whom the goods were seized, or whose goods were abandoned. | Principal is discharged before penalties – the ordering more favourable to the taxpayer. |
| 3 | Administrative Penalties due from that taxpayer. | Ranks after Tax. |
| 4 | Where the owner has exhausted the right to retrieve the goods, any remaining amounts may be deposited into their tax account. | A surplus is credited, not paid out; converting it into cash requires a separate refund application. |
| 5 | By way of exception, where the owner has waived the right to recover such amounts, the remainder may be included within the FTA’s other revenues. | The wording of any waiver or settlement carries direct financial consequence. |
Two consequences deserve emphasis. A surplus is deposited into the tax account rather than remitted, so extracting it in cash requires recourse to the refund mechanism under the TP Law, with its own conditions and timelines. And by reason of Article 26(4), a sale does not extinguish liability beyond the amount actually realised: where the proceeds fall short, the balance remains due and the taxpayer will have lost the goods as well.
Conclusion
Decision No. 7 of 2026 does not create new liabilities. It supplies the procedural detail that Article 26 of the TP Law and Article 22 of the Executive Regulation had left to the FTA, and in doing so makes an existing power operable. For businesses whose stock is exposed to seizure, the meaningful preparation is operational rather than legal – knowing who responds, how quickly, and with what documents – and that is considerably easier to put in place before a seizure than after one.
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