Key VAT Decree Law and Tax Procedures Law changes effective 1 January 2026
Major updates to UAE tax legislation, effective from 1 January 2026, introduce new time limits for claiming tax refunds and credits, stronger anti-evasion measures, and several administrative simplifications across the VAT and Tax Procedures Laws. These amendments are designed to enhance compliance and bring the UAE tax framework in line with global standards.
Summary of changes to the Federal Decree-Law No. 8 of 2017 (VAT Law)
| Article 48 (1) - Reverse Charge |
| Old Provision |
Amended Provision |
| If the Taxable Person imports Concerned Goods or Concerned Services for his Business, then he shall be treated as making a Taxable Supply to himself and shall be responsible for all applicable Tax obligations and accounting for Due Tax in respect of these supplies. |
If the Taxable Person imports Concerned Goods or Concerned Services for his Business, then he shall be treated as making a Taxable Supply to himself and shall be responsible for accounting for the Due Tax on that Supply and complying with all other Tax obligations arising, except for issuing a Tax Invoice to himself. |
| Note: While the amended Decree-Law exempts recipients from issuing self-tax invoices under RCM, it is advisable that the taxpayer still issue an invoice if the overseas supplier’s invoice lacks complete supply details. |
Article 54 (bis) Recoverable Input Tax – New Provision
1. The Authority shall reject the deduction of the Recoverable Input Tax if it is established to the Authority that the supply subject to the deduction was part of a supply or a chain of supplies related to Tax Evasion, and the Taxable Person was aware of this relation upon deducting the Recoverable Input Tax.
2 . The Authority may reject the deduction of the Recoverable Input Tax if it is established to the Authority that the supply subject to the deduction was part of a supply or a chain of supplies related to Tax Evasion, and the Taxable Person should, based onthe circumstances of the supply, have been aware of this relation.
3. For the purposes of applying the provisions of Clause 2 of this Article, the Taxable Person shall be considered to have been required to be aware that the supply was part of a supply or a chain of supplies related to Tax Evasion, if he did not verify the validity and integrity of the supplies he receives before deduction of Input Tax, in accordance with the measures, procedures and conditions determined by the Authority in this regard.
Note: The new conditions for input tax recovery place greater obligations on taxpayers to maintain strong compliance systems and conduct thorough supplier due diligence before claiming input tax credits.
| Old Provision |
Amended Provision |
Article 74 (3) – Excess Recoverable Tax
If no request is submitted to recover the excess after offsetting, the excess Recoverable Tax will be carried forward to the subsequent Tax Periods. |
Article 74 (3) – Excess Recoverable Tax
If no request is submitted to recover the excess after offsetting, the excess shall be carried forward to subsequent Tax Periods for a period not exceeding five (5) years from the end of the Tax Period in which the excess arose. If no request to recover the excess has been submitted or it was not used to settle any Tax liabilities before the expiry of this period, the right to claim such excess shall lapse and may not be used to settle any Tax liabilities. |
| Note: Taxable persons may carry forward and claim excess funds with the authority within five years from the date they become eligible; otherwise, the excess credit will not be available to offset the liability or for refund. |
| Old Provision |
New Provision |
Article 9 (3) – Determination of Payable Tax
If the Taxable Person pays an amount greater than the value of the Payable Tax, or has a credit with the Authority, the Authority may allocate the amount or credit to settle any Tax or amounts due, as specified in the Executive Regulation. |
Article 9 (3) – Determination of Payable Tax
If the Taxable Person pays an amount greater than the value of the Payable Tax, or has a credit balance with the Authority, the Authority may allocate the amount or credit balance to settle any Tax or liabilities to the Authority, within a period not exceeding five (5) years from the end of the relevant Tax Period referred to in Clause 2 of Article 38 of this Decree-Law, as specified in the Executive Regulation. |
| Note: Further to the above-mentioned changes to the VAT law – Article 74 (3), the Tax Procedures Law has also been amended accordingly. |
| Old Provision |
New Provision |
Article 10 (5) – Voluntary Disclosure
If the Taxpayer discovers an error or omission in the Tax Return submitted to the Authority, where there is no difference in the amount of Due Tax, the Taxpayer must correct such return by submitting a Voluntary Disclosure. |
Article 10 (5) – Voluntary Disclosure
If the Taxpayer discovers an error or omission in the Tax Return submitted to the Authority, where there is no difference in the amount of Due Tax, the Taxpayer must correct such error by submitting a Voluntary Disclosure in the cases specified by the Authority, or correct such error via a Tax Return in any other case. |
| Note: The Taxpayer must submit a Voluntary Disclosure for cases specified by the Authority—such as emirate-wise reporting, exempt and zero-rated sales—even if there is no tax impact. All other corrections (as specified by the Authority) should be made through the Tax Return. |
| Old Provision |
New Provision |
| |
Article 38 (2) – Application for Refund of Credit Balance
2. The refund application must be submitted within a period not exceeding five (5) years from the end of the Tax Period to which any of the following applies, as the case may be:
a. The excess payment was made if the credit balance resulted from an excess Tax payment.
b. The Tax Return or Voluntary Disclosure was submitted, or the Tax Assessment was issued, if the credit balance resulted from a Tax Return or a Voluntary Disclosure submitted to the Authority, or otherwise from a decision issued by the Authority.
c. The credit balance arose in any other cases.
3. As an exception to the provisions of Clause 2 of this Article, if the credit balance arose as a result of a decision issued by the Authority after the expiry of the five (5) years period referred to or during the last ninety (90) days thereof, the Taxpayer may submit the refund application within one year from the date on which this balance arises.
4. Without prejudice to the provisions of Clause 3 of this Article, if the credit balance arose in any other case after the expiry of the five (5) year period referred to or during the last ninety (90) days thereof, the Taxpayer may submit the refund application within ninety (90) days from the date on which this balance arises.
5. The Authority shall review the application submitted under this Article and notify the Taxpayer of its decision as to whether it has accepted or rejected the application.
6. If the refund application is not submitted according to the deadlines provided for in this Article, the right to claim a refund of the excess Tax paid or the credit balance shall lapse. |
| Note: VAT refund applications must be submitted within five years from the end of the relevant Tax Period. If the credit arises due to a decision issued by the Authority, the Taxpayer has one year to apply for a refund, while ninety (90) days are allowed in other cases. Taxpayers whose Tax Periods have already lapsed may apply for a VAT refund within one year from the Decree-Law’s effective date (1 January 2026). |
| Old Provision |
New Provision |
| |
Article 3 (1) – Transitional Relief
Taxpayers whose five-year claim period has expired or is set to expire within one year of the Decree-Law’s effective date may still submit a request for a refund or apply credit balances toward any outstanding Tax or penalties.
The request must be submitted within one (1) year from 1 January 2026.
Practical implications:
- Until 31 December 2026, businesses can claim outstanding refunds for the Tax Years 2018–2020.
- Failure to submit a request within this period will result in the permanent forfeiture of refund rights.
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| Old Provision |
New Provision |
| |
Article 46 (4) and (6) – Statute of Limitation
4. The Authority may conduct a Tax Audit or issue a Tax Assessment after five (5) years from the end of the relevant Tax Period if the Tax Audit or the issuance of the Tax Assessment relates to a refund application related to Tax or credit balance submitted in the fifth year from the end of the Tax Period referred to in Clause 2 of Article 38 of this Decree-Law, or during the period referred to in Clauses 3 and 4 of Article 38 of this Decree-Law, as the case may be, provided that the Tax Audit is completed or the Tax Assessment is issued, as the case may be, within two (2) years from the date of submission of the refund application.
6. No Voluntary Disclosure may be submitted after the expiration of five (5) years from the end of the relevant Tax Period, with the exception of submitting a Voluntary Disclosure in accordance with Clause 2 of Article 10 of this Decree-Law, where the Voluntary Disclosure is related to a refund application for which the Authority has not yet issued a decision. |
| Note: Notwithstanding the expiry of the five-year audit period, where a Taxpayer submits a VAT refund claim in the fifth year, the submission extends the Authority’s right to conduct a Tax Audit for an additional period of two (2) years from the date of submission of the refund claim. A Voluntary Disclosure may be submitted after the expiry of five (5) years where the disclosure relates to a Tax refund for which a decision has not yet been issued by the Authority. |
In summary, the Federal Tax Authority has introduced significant amendments to the procedures for submitting refund and voluntary disclosure applications. These changes aim to streamline the process, enhance clarity, and strengthen compliance requirements. The amended regulations clearly define the timelines for claiming eligible tax credits and submitting voluntary disclosures, leaving limited scope for delays or non-compliance.
At CLA Emirates, we recognize the importance of timely and accurate submission of refund applications and voluntary disclosures in accordance with UAE VAT laws. Our dedicated VAT specialists carefully assess the current status of taxable persons and provide practical guidance to help businesses adapt to the evolving regulatory landscape and remain fully compliant.
