The UAE is preparing to roll out a major reboot of its tax procedures on 1 January 2026, aiming to make life easier for taxpayers while giving the Federal Tax Authority (FTA) stronger tools to ensure compliance.
At the heart of the reform is a push for clarity: clearer rules, clearer deadlines, and clearer expectations for both taxpayers and the FTA.
The changes come through new amendments to the Tax Procedures Law—issued under Federal Decree-Law No. 17 of 2025—and related tweaks to the VAT Law. Together, they mark one of the most significant updates to the country’s tax framework since VAT was introduced in 2018.
One of the biggest shifts is the introduction of a firm five-year window for refund claims. Under the current system, taxpayers with credit balances often face uncertainty about how long they have to request a refund.
Starting in 2026, the clock will be fixed—taxpayers will have up to five years from the end of the relevant tax period to apply for a refund or use the balance to settle other tax debts.
This matters because it removes ambiguity. Businesses will be able to plan their cash flow better, knowing exactly how long they have before a credit expires. For individuals and smaller companies, it reduces the risk of losing money simply because the rules are unclear.
There is also built-in flexibility for unique situations: if a credit arises after the five-year period has already closed or within the final 90 days of it, taxpayers can still apply for a refund. This safety valve is meant to ensure no one is unfairly penalised by timing quirks, a tax consultant at Kaden Boriss explained.
Another cornerstone of the amendments is the expansion of the FTA’s audit and investigation powers. While this may sound intimidating, the intention is to strengthen transparency across the system. The FTA will have clearer authority to carry out audits, request information, and enforce compliance. For honest taxpayers, this should translate into fewer disputes, quicker resolutions, and a more predictable process.
For the system as a whole, it means tighter oversight and fewer loopholes.
The transitional rules are also important. Taxpayers who have existing credit balances when the new law takes effect will be guided by clear rules on how to carry these balances forward or request refunds under the updated timelines. This prevents confusion during the switch from the old framework to the new one.
Taken together, these changes reflect the UAE’s effort to align its tax landscape with global best practices. By tightening procedures and establishing firm time limits, the country aims to reduce administrative burdens, build trust with businesses, and safeguard the rights of both taxpayers and the FTA.
The Ministry of Finance says the reforms will boost transparency and support the UAE’s long-term goal of a modern, efficient, and internationally competitive tax system.
For taxpayers, the message is simple: know your deadlines, keep your records tight, and expect smoother, more structured interactions with the FTA from 2026 onwards.
