The UAE government has issued a Federal Decree-Law amending the Corporate Tax Law to provide clearer mechanisms for calculating and settling tax liabilities when incentives and credits apply.
This update specifies a sequential process for settling tax dues: first using withholding tax credits, then foreign tax credits, followed by other Cabinet-approved incentives, with any remainder paid per existing rules. Taxable persons can now claim payments for unutilised credits under set conditions, and the Federal Tax Authority (FTA) is authorised to withhold from revenues to settle approved claims. These changes address practical challenges from the first full corporate tax filing season, where over 640,000 businesses complied by September 2025, highlighting needs in transfer pricing and free zone audits.
What this means:
UAE business owners should review tax credit balances and related-party transactions now to leverage refunds and avoid penalties, strengthening cash flow amid evolving FTA guidance.