UAE:​ Significant legislative updates to tax procedures, VAT, and excise tax laws

• Self-invoicing will no longer be required for imports of goods and services for business purposes, simplifying compliance for businesses engaged in cross-border transactions.​

• A five-year time limit is introduced for carrying forward and claiming excess recoverable input tax.​

• Any balance remaining after five years will not be eligible for offset or refund.​

• Taxpayers whose five-year refund eligibility have expired or will expire within one year from 1 January 2026 may request a refund before 1 January 2027 based on the transitional rule given in the amended Tax Procedures Law.​

Article 54

Recoverable Input Tax​

Three new anti-evasion provisions strengthen due diligence requirements for taxpayers:​

• The FTA will disallow input tax if the supply is linked to tax evasion and the taxpayer knew or should have known of the connection.​

• Taxpayers are expected to verify the validity and integrity of supplies before recovering input tax.​

• Failure to exercise due diligence may result in denial of recovery.​

Article 79 (bis)​

Status of Limitation​

• VAT-specific Article 79 bis is repealed. ​

• Limitation rules will now align with the revised Tax Procedures Law effective 1 January 2026, ensuring consistency across tax frameworks.​

• A five-year period is now allowed for the FTA to allocate excess tax credits or overpayments against taxpayer liabilities.​

• For errors or omissions that do not affect the amount of tax due, the FTA will define cases requiring a Voluntary Disclosure (VD) and those that can be corrected in subsequent returns.​

• Clause 2: Refund applications for input tax credit balances must be filed within five years from the end of the tax period in which the balance arises.​

• Clause 3: If a credit balance arises from an FTA decision made after the five-year period, taxpayers can submit a refund application within one year from the date the balance arises.​

• Clause 4: If a credit balance arises after the five-year period or during the last 90 days of that period, taxpayers may submit an application within 90 days from the balance date.​

• Clause 5: The FTA is obliged to review and notify taxpayers of its decision (approval or rejection).​

• Clause 6: The right to apply for a refund expires after five years if no application is submitted.​

• Clause 1: Five years is the default limitation for audits and tax assessments, with exceptions under specific clauses.​

• Clause 4: If a taxpayer applies for a refund during the last 90 days of or after the fifth year, the FTA may audit or issue an assessment related to that claim. Any audit or assessment must be completed within two years from the refund or credit claim date.​

• Clause 6: Introduces a specific exception for refund-related VDs to extend the five-year limitation.​

• Grants the FTA formal authority to issue binding decisions and guidance on tax law application.​

• Clause 1: Taxpayers whose five-year refund eligibility have expired or will expire within one year from effective of the Decree-Law may request a refund before 1 January 2027.​

• Clause 2: For refund applications submitted under transitional rules, taxpayers may file a VD within two years from the refund application date if the FTA has not issued a decision.​

• Clause 3: The FTA may audit or issue an assessment related to the refund application during this period, provided the audit or assessment is completed within two years.​

• Article 25 of the Excise Tax Law has been cancelled pursuant to Federal Decree-Law No. 17 of 2025 amending certain provisions of the Tax Procedures.​