UAE Streamlines Corporate Tax, VAT, and Company Laws with Major Amendments

The UAE has introduced comprehensive amendments to its corporate tax, value added tax (VAT), and Commercial Companies Law designed to reduce regulatory ambiguity and provide clearer guidance for businesses operating in the country.

The corporate tax amendments clarify how companies should calculate and settle tax liabilities when credits, incentives, or reliefs apply. Tax credits will now be applied in a defined order: first withholding tax credits, then foreign tax credits, followed by any Cabinet-approved incentives or reliefs. Taxpayers can claim refunds for unused tax credits, provided they follow specified timelines and procedures. The corporate tax rate remains unchanged at 9% on profits above AED 375,000, with profits below this threshold remaining tax-free.

Under Federal Decree Law No. 16 of 2025 (effective January 1, 2026), businesses no longer need to issue self-invoices under the reverse charge mechanism if they maintain supporting documentation. A five-year deadline has been introduced for submitting claims to recover excess refundable VAT after reconciliation, providing clear timelines for managing tax recoveries.

The amended Commercial Companies Law now allows the establishment of non-profit companies, enabling organizations to reinvest net profits toward their objectives without mandatory shareholder distributions. Companies can also adopt more complex capital structures, including multiple classes of shares with differentiated rights for voting, profit distribution, redemption, and liquidation.