The UAE Ministry of Finance has issued Federal Decree-Law No. (16) of 2025, which amends Federal Decree-Law No. (8) of 2017 on Value Added Tax (VAT). The changes will take effect on January 1, 2026.
The amendments form part of the UAE’s work to develop its tax system and enhance administrative and regulatory efficiency.
The amendments relieve taxable persons from issuing self-invoices when applying the reverse charge mechanism. However, they must retain supporting documents related to supply transactions, as specified by the Executive Regulation.
New UAE VAT law introduces five-year limit on tax refund claims
This measure enhances administrative efficiency, provides audit evidence, and reduces procedural burdens.
The decree establishes a five-year time limit for submitting requests to reclaim excess refundable tax after reconciliation. Once this period elapses, the right to reclaim the tax expires.
The change prevents the build-up of balances, strengthens financial certainty, and promotes fairness among taxpayers, in line with international practices for regulating refund processes and reviewing balances.
The amendments authorise the Federal Tax Authority (FTA) to deny the deduction of input tax if it determines that the supply forms part of a tax-evasion arrangement.
Taxpayers must verify the legitimacy and integrity of supplies before deducting input tax, in line with the procedures and measures set out by the FTA. This reinforces responsibility, strengthens governance across the supply chain, and safeguards revenue.
The Ministry of Finance said the amendments “support the UAE’s ongoing efforts to enhance the tax system, ensure a fair and transparent compliance environment, and promote both financial and administrative efficiency.”
The ministry added that the measures “further support the sustainability of public resources and bolster the competitiveness of the national economy.”
