The UAE's updated tax procedures came into effect on January 1, 2026, introducing clearer timelines and stronger protections for businesses managing tax credits and refunds. These amendments, delivered through Federal Decree-Law No. 17 of 2025, aim to reduce administrative burdens while aligning the system with international standards.
Key Changes for Your Business
The Federal Tax Authority (FTA) has introduced five major updates that affect how you manage refunds, audits, and tax compliance:
Tax Credit Refunds Now Have Clear Deadlines
Businesses have a maximum five-year window to request refunds of tax credit balances or use them to settle outstanding liabilities. If your credit period expires between now and January 1, 2027, you have one additional year to file a refund request—giving you a second chance to claim old credits that might otherwise be lost.
Stronger Certainty During Audits
The FTA can now conduct audits or issue assessments even after the usual limitation period in certain cases, such as when refund requests are filed in the last year. This provides fair treatment for late-period cases while protecting the state's financial interests.
Unified Tax Guidance Reduces Confusion
The FTA can now issue official, binding directions on how to apply tax laws. This means clearer, more consistent interpretation across all sectors, reducing the risk of errors and compliance disputes.
Simplified VAT Compliance
Businesses no longer need to issue self-invoices under the reverse charge mechanism—just keep regular supporting documents. This cuts administrative work and offers clearer certainty over your tax position.
Voluntary Disclosures Get Extended Timelines
If no FTA decision has been issued, voluntary disclosures can be filed within two years, offering flexibility for resolving compliance issues.
What This Means
- Act now on old credits: If you have tax credit balances approaching or past their five-year expiry, review them immediately with your accountant to avoid forfeiture.
- Better budgeting ahead: Clearer deadlines and FTA guidance mean more predictable tax planning and fewer surprise assessments.
- Streamlined compliance: Reduced paperwork requirements and unified tax rules lower your compliance costs and operational complexity going forward.
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