UAE Tax Procedures Law Key Amendments Taking Effect in January 2026
- 05.12.2025
- Posted by: Uwe Hohmann
- Categories: Tax, Dubai
The MoF (Ministry of Finance) has issued an update on Federal Decree-Law No. (17) of 2025, introducing changes to Federal Decree-Law No. (28) of 2022 on Tax Procedures. These amendments will come into force on 01.01.2026 and bring important updates that businesses in the UAE need to understand.
What Is Changing and Why It Matters
The revised law establishes clearer rules around tax refunds, audit timelines, and procedural requirements. For business owners, these changes affect how you manage credit balances with the FTA (Federal Tax Authority) and how long you have to act on them.
The core objective is straightforward: create a more structured framework that balances taxpayer rights with the government’s need for financial oversight.
New Rules for Tax Refund Requests
One of the most important changes involves the timeframe for claiming refunds of credit balances held with the FTA.
Under the amended law, taxpayers will have a maximum of five years from the end of the relevant tax period to request a refund or use that balance to offset other tax liabilities. This gives businesses a defined window to manage their tax positions.
There is also built-in flexibility. If a credit balance arises after the five-year period has ended, or within the final 90 days of that period, taxpayers may still submit a refund request in specific circumstances. This provision protects businesses from losing legitimate entitlements due to timing issues.
Extended Powers for the FTA
The amendments give the FTA broader authority in certain situations. The Authority will now be able to conduct audits or issue tax assessments after the standard limitation period has expired in specific cases, particularly where refund requests are submitted in the final year of that period.
Additionally, the FTA gains the power to issue official, binding directions on how tax legislation applies to specific transactions. These directions will apply to both taxpayers and the Authority itself, which should reduce inconsistencies in how different cases are handled and provide greater certainty for businesses.
Transitional Provisions: Action Required for Existing Credit Balances
Businesses with existing credit balances should pay close attention to the transitional rules.
If your five-year period expired before 01.01.2026, or will expire within one year of that date, you have until 01.01.2027 to submit a refund request. You may also file a voluntary disclosure related to that request within two years from submitting it, provided the FTA has not yet issued a decision.
This transitional window is designed to ensure that businesses are not unfairly disadvantaged by the new rules and that outstanding matters can be resolved.
What This Means for Your Business
These amendments are showing a continued effort to align the UAE tax system with international standards while reducing administrative complexity. For business owners, the key takeaways are:
- The five-year limit on refund claims is now formally established. Review your tax records and identify any credit balances that may be affected.
- If you have older credit balances with the FTA, the transitional provisions give you a limited window to act. Do not wait until the deadline approaches.
- Binding FTA directions on tax interpretation should bring more consistency, but it also means staying informed about any guidance the Authority issues.
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