Implementation of amendments to tax law from Jan.1, 2026: MoF

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, as part of the UAE’s continuous efforts to enhance the efficiency of the tax system and strengthen the principles of transparency and fairness in tax transactions. The amended law will come into effect on 1 January 2026.

The amendments aim to establish a clearer and more structured 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, thereby enhancing financial discipline.

The amendments set a period not exceeding five (5) years from the end of the relevant tax period for requesting the refund of a credit balance from the Authority or for using that balance to settle tax liabilities. This provides a clear timeframe for organising such financial processes, while granting additional flexibility to submit a refund request if the credit balance arises after the five-year period has elapsed or within the last ninety (90) days of that period (in specific cases), ensuring taxpayers’ rights and strengthening financial certainty.

The amendments also expand the provisions related to limitation periods, granting the Authority the power to conduct tax audits or issue tax assessments after the expiry of the limitation period in certain cases, such as refund requests submitted in the final year of the limitation period, to ensure a balance between protecting taxpayers’ rights and safeguarding the state’s financial entitlements.

The amendments further grant the Authority the power to issue official and binding directions to taxpayers and to the Authority itself regarding the application of tax legislation to tax transactions, without prejudice to the provisions of applicable tax laws.

This facilitates practical implementation, unifies interpretation, and reduces risks arising from inconsistencies in handling different cases.

The amendments include transitional provisions enabling taxpayers who have credit balances with the Authority, where the related five-year period expired before 1 January 2026 or will expire within one year from that date, to submit refund requests within one year from 1 January 2026.

They may also submit a voluntary disclosure related to that request within two years from the date of filing the request, if the Authority has not yet issued a decision on it. This ensures tax fairness and enables all previous requests to be addressed in a fair and flexible manner.

The Ministry of Finance affirmed that the new amendments reflect the UAE’s approach to developing its financial policies in line with international best practices. They contribute to improving the efficiency of the tax system and enhancing the business environment by strengthening trust and transparency and reducing administrative burdens, thereby supporting sustainable public revenues and promoting economic growth.

 WAM