UAE Tax Procedures Law Tightens Credit Refund Rules – What You Need to Know

The UAE's Ministry of Finance has implemented significant amendments to the Tax Procedures Law, effective 1 January 2026, bringing tighter controls and clearer timelines for VAT credit refunds and tax compliance obligations.

Under Federal Decree-Law No. 17 of 2025, the Federal Tax Authority (FTA) has established a firm five-year window for requesting refunds of credit balances or using them to settle tax liabilities. This replaces previous ambiguity and creates a clearer financial roadmap for businesses. The law includes a limited safety valve: taxpayers can submit refund requests within 90 days before the five-year deadline expires, or up to one year after if the credit arose after the initial five-year period.

The amendments also grant the FTA expanded powers to conduct tax audits or issue assessments beyond the original limitation period in specific cases—such as when refund requests are submitted in the final year of that period. This reflects a shift toward stricter enforcement while the law simultaneously introduces new flexibility: the FTA can now issue official, binding directions on how tax rules apply to specific transactions, reducing inconsistencies in case handling.

Crucially, transitional rules protect businesses with legacy credit balances. If your company's five-year window expired before 1 January 2026, or will expire within one year from that date, you have until 1 January 2027 to submit a refund request—and up to two years to file voluntary disclosures related to that request if the FTA has not yet ruled.