November 29, 2025 | 2 MIN READ
By: Saif Chartered Accountants, Dubai CA
The UAE Ministry of Finance has issued Federal Decree-Law No. (17) of 2025. This law changes important parts of Federal Decree-Law No. (28) of 2022 on Tax Procedures.
These changes will start on January 1, 2026. They provide clearer rules on refunds, audits, time limits, taxpayer rights, and financial discipline.
For businesses in Dubai and the UAE, there are new rules. This is a big change, especially for small and medium-sized enterprises and free zone companies. These rules affect VAT, Corporate Tax, Excise Tax, and overall tax compliance.
What’s Changing from 1 January 2026?
Understanding the UAE Tax Procedure Changes 2026 is essential for all businesses to stay compliant and avoid penalties related to the UAE Tax Procedure Changes 2026.
The updated law aims to streamline procedures and enhance transparency while protecting taxpayer rights, reflecting the significant UAE Tax Procedure Changes 2026 that businesses must adapt to.
✔ A Clear 5-Year Limit for Refunds & Credit Balances
Businesses will now have up to five years from the end of the relevant tax period to:
- Request a refund of credit balances
- Use credit balances to settle tax liabilities
If not used for more than 5 years, taxpayers may lose the right to claim those credits. This makes good tax planning very important.
✔ More Flexibility for Late-Arising Credits
Additional time is granted when:
In light of these updates, entrepreneurs must closely monitor the UAE Tax Procedure Changes 2026 to ensure compliance and leverage any potential benefits.
- Credits arise after the 5-year period
- Credits arise within the last 90 days of the 5-year window
This protects taxpayer rights in delayed assessments or FTA decisions.
✔ Expanded FTA Audit & Assessment Powers
The Federal Tax Authority (FTA) can still do audits or issue assessments even after the time limit. This is especially true when refunds are asked for in the last year.
This ensures balanced protection of:
- Taxpayer rights, and
- Government revenue requirements
✔ FTA Can Issue Binding Tax Directions
The amendments authorize the FTA to release official, binding interpretations of tax laws.
This helps reduce different interpretations and gives businesses more confidence in their tax positions. This is especially true for Corporate Tax Impact Assessment in UAE.
Transitional Relief for Older Credit Balances (2026 Window)
The law provides one-time relief for taxpayers with old credit balances where:
- The 5-year period already expired before 1 January 2026, or
- Will expire within one year after that date
Relief Benefits:
- Refund requests can be filed within 1 year from 1 January 2026
- Voluntary disclosures (related to such refunds) may be filed within 2 years
- Provided the FTA has not issued a decision yet
This is a critical opportunity for companies that have pending VAT or tax credits.
How These Changes Affect UAE Businesses
These amendments apply to all federal taxes, including:
- Corporate Tax (CT)
- Value Added Tax (VAT)
- Excise Tax
Companies—especially SMEs, mainland LLCs, and free zone entities—must carefully update their tax governance systems.
This includes reviewing:
- Credit balances
- VAT refund positions
- Voluntary disclosures
- Corporate Tax compliance
- Record-keeping & documentation processes
- FTA audit readiness
- Internal tax controls & policies
Action Steps: What You Should Do Before January 2026
1. Review All VAT & Corporate Tax Credit Balances
Check for credits that:
- Exceed 3–4 years, or
- May soon reach the 5-year deadline
Decide whether to claim or offset them.
2. File Voluntary Disclosures (if needed)
Correct past return errors before the period becomes time-barred.
3. Strengthen Record-Keeping for FTA Audits
Ensure all invoices, contracts, and accounting data are:
- Accessible
- Correct
- Stored for the required retention period
4. Update Internal Tax Policies
Finance teams should be trained on:
- New limitation periods
- Refund-related documentation
- FTA audit procedures
- Correct handling of refunds and credit balances
5. Conduct a Corporate Tax Impact Assessment
These procedural changes directly affect how businesses:
- Calculate tax positions
- Use tax losses
- Manage refunds
- Respond to audits
How Saif Chartered Accountants Can Help
Saif Chartered Accountants, a trusted audit firm in Dubai with 30+ years of experience, provides:
- Corporate Tax Impact Assessment UAE
- VAT filing services and VAT refund reviews
- FTA audit support & tax health checks
- Voluntary disclosure filing
- Accounting, auditing & compliance services across UAE
If your business needs support from qualified auditors in UAE, our Dubai CA team is ready to assist.
Frequently Asked Questions
1. Does this apply only to Corporate Tax?
No. These procedural amendments apply to all UAE federal taxes, including VAT and Excise.
2. What if we ignore the 5-year credit rule?
You may permanently lose the right to:
- Request a refund
- Offset the balance against future taxes
3. Will old VAT credits expire?
Yes, unless acted upon.
BUT transitional rules give a 1-year remedy window starting January 2026.
4. Will FTA audits increase due to this?
Refund claims submitted in the last year may lead to extended audit windows.
The UAE’s 2026 tax procedure amendments bring stronger clarity, fairness, and administrative discipline.
Businesses must act now—before January 2026—to review credit balances, prepare for audits, and align compliance systems.
Saif Chartered Accountants is here to support your business for Corporate Tax, VAT, audits, and compliance across UAE.
