The UAE Ministry of Finance has implemented significant amendments to the Tax Procedures Law through Federal Decree-Law No. 17 of 2025, effective January 1, 2026. These changes are designed to clarify taxpayer rights, strengthen compliance procedures, and create a more predictable tax environment for businesses.
The Main Changes
Five-Year Refund Deadline
One of the most important updates introduces a clear five-year window for requesting tax refunds or using credit balances across all federal taxes—Corporate Tax, VAT, and Excise Tax. This deadline runs from the end of the relevant tax period when the credit arose. After five years, unclaimed credits expire permanently.
However, there is flexibility: claims submitted in the final year of the limitation period can still be verified by the FTA, provided the audit is completed within two years of the refund claim submission.
Relief for Older Credit Balances
Taxpayers whose five-year refund period expired before January 1, 2026, or will expire within one year of that date, receive a new one-year window to file refund requests. Additionally, they may submit a voluntary disclosure within two years of filing a refund request if the FTA has not yet issued a decision.
Binding Tax Interpretations
The Federal Tax Authority now has authority to issue official, binding directions clarifying how specific tax provisions apply. These directions are binding on both taxpayers and the FTA itself, reducing inconsistencies and compliance uncertainty.
Expanded Audit Powers
The FTA's audit authority has been expanded in specific, limited circumstances—such as when a refund request is submitted near the end of the limitation period. This balances taxpayer protection with the government's need to verify claim accuracy and safeguard revenues.
What This Means
- Plan Your Refund Claims Now: The five-year rule is rigid. Businesses should audit their credit balances immediately and file any outstanding refund claims to avoid permanent loss. Mark the refund deadline clearly on your tax calendar.
- Expect Stricter Compliance: The FTA's expanded audit powers and binding interpretations mean closer scrutiny, especially for late-stage claims. Ensure your records are accurate and complete; the FTA will have clearer authority to verify refund accuracy.
- Leverage Transitional Relief: If you have old credit balances or borderline cases, use the new one-year window and voluntary disclosure provisions to resolve them fairly before normal procedures apply.