This year, in 2025, the UAE Ministry of Finance announced the issuance of Federal Decree-Law No. 16 of 2025, which introduces amendments to certain provisions of the Value Added Tax Law under Federal Decree-Law No. 8 of 2017. The updated regulations will take effect from January 1, 2026, as part of the UAE’s broader efforts to modernize its tax framework and improve administrative efficiency.
Simplifying Tax Procedures
The amendments are designed to make VAT procedures easier for businesses while maintaining transparency and alignment with international standards. Under the new rules, taxable persons will no longer be required to issue self-invoices when applying the reverse charge mechanism.
Instead, businesses must retain supporting documentation related to supply transactions in accordance with the Executive Regulation. This change is expected to reduce procedural burdens, improve record-keeping clarity, and provide stronger audit evidence.
Time Limit On VAT Refund Claims
More so, a key change introduces a five-year deadline for submitting requests to reclaim excess refundable VAT after reconciliation has been completed. Once this period expires, the right to recover the tax will no longer apply. This measure aims to prevent the accumulation of outdated tax balances, enhance financial certainty for both businesses and authorities, and promote fairness across the tax system in line with global best practices.
Tighter Measures To Prevent Tax Evasion
To strengthen governance and curb tax evasion, the amendments grant the Federal Tax Authority the power to deny input tax deductions if a supply is deemed to be part of a tax-evasion scheme. Businesses will be required to ensure the legitimacy and integrity of transactions before claiming input tax, reinforcing shared responsibility across supply chains and helping to protect public revenue.
Strengthening UAE’s Tax Framework
According to the Ministry of Finance, these changes support the UAE’s continued efforts to enhance its tax system, foster a fair and transparent compliance environment, and improve both financial and administrative efficiency. The amendments are also expected to contribute to the sustainability of public resources and strengthen the long-term competitiveness of the national economy.
