UAE introduces changes to tax rules starting January 2026

The Ministry of Finance has announced the issuance of Federal Decree-Law No. (17) of 2025, amending certain provisions of Federal Decree-Law No. (28) of 2022 on Tax Procedures.

The amendments, which take effect on 1 January 2026, are part of the UAE’s ongoing efforts to enhance the efficiency of the tax system and strengthen transparency and fairness in tax transactions.

Enhancing financial discipline

The amendments aim to establish a clearer legal framework for tax obligations and procedures, including regulating the timeframe for requesting refunds of credit balances with the Federal Tax Authority (FTA).

This ensures greater clarity regarding the rights and obligations of both taxpayers and the FTA, promoting stronger financial discipline.

The new law sets a period of up to five years from the end of the relevant tax period for requesting a refund of a credit balance or using it to settle tax liabilities.

In specific cases—such as when the balance arises after the five-year period or within the last 90 days of that period—taxpayers are granted additional flexibility to submit refund requests, ensuring their rights are protected and financial certainty is strengthened.

Balance and flexibility

The amendments expand provisions related to limitation periods, allowing the FTA to conduct audits or issue assessments after the expiry of the limitation period in certain cases, such as refund requests submitted in the final year. This balances taxpayer rights with safeguarding the state’s financial entitlements.

The FTA is also granted the authority to issue official, binding directions regarding the application of tax legislation, both to taxpayers and itself. This unifies interpretation, reduces inconsistencies, and facilitates practical implementation of tax rules.

Transitional provisions

Taxpayers with credit balances where the related five-year period expired before January 1, 2026, or will expire within one year from that date, can submit refund requests within one year from January 1, 2026. Voluntary disclosures related to these requests can be submitted within two years from the date of filing if the FTA has not yet issued a decision, ensuring fairness and flexibility.

Supporting economic growth

The Ministry of Finance affirmed that the amendments reflect the UAE’s commitment to aligning financial policies with international best practices. The changes aim to improve the efficiency of the tax system, enhance business confidence, reduce administrative burdens, and support sustainable public revenues, thereby promoting economic growth.