UAE Unveils Groundbreaking Amendments To Tax Procedures Set To Revolutionize Refund Processes And Strengthen Financial Governance For Businesses In 2026

Published on November 30, 2025

The UAE’s new tax amendments, set to take effect from January 2026, aim to enhance the efficiency and transparency of the tax system. By streamlining refund requests, extending audit periods, and ensuring clearer taxpayer rights, these changes will create a more balanced and predictable tax environment. These reforms are designed to boost business confidence, reduce administrative burdens, and promote economic growth, reinforcing the UAE’s commitment to aligning with global best practices in financial governance.

The UAE Ministry of Finance has unveiled new amendments under Federal Decree-Law No. (17) of 2025, which will modify certain provisions of Federal Decree-Law No. (28) of 2022 concerning tax procedures. The amendments, effective from January 1, 2026, are part of the country’s broader initiative to enhance the tax system’s efficiency, bolster transparency, and ensure fairness in tax dealings.

Strengthening Financial Governance

These revisions focus on establishing a more structured legal framework for tax obligations and procedures, particularly concerning the process for requesting refunds of credit balances held by the Federal Tax Authority (FTA). The goal is to ensure a more transparent and predictable tax environment for taxpayers, while also enhancing the efficiency of the authority.

The amendments introduce a clearly defined period of up to five years from the end of a tax period within which taxpayers can request refunds of credit balances or apply them to settle tax liabilities. This timeline provides both clarity and certainty for taxpayers, helping them better understand their rights and obligations. In situations where the credit balance arises after this five-year period or falls within the final 90 days, taxpayers are granted extra time to submit refund requests, ensuring their financial rights are upheld.

A Balanced Approach to Taxpayer Rights

The revisions also address the limitation periods for audits and assessments. The FTA now has the authority to conduct audits or issue assessments beyond the typical expiration period under certain conditions, such as when refund requests are filed during the final year of the five-year limit. This approach strikes a balance between safeguarding taxpayer rights and protecting the state’s financial interests, ensuring that both parties are treated fairly and equitably.

In addition, the amendments grant the FTA the power to issue official, binding directions on the application of tax legislation. This new provision will help unify interpretations, minimize inconsistencies, and make it easier for both taxpayers and the FTA to apply tax rules accurately. By providing clarity on how tax laws should be applied, the FTA can streamline its operations and reduce administrative burdens.

Flexible Transitional Provisions

For taxpayers whose credit balances have already exceeded the five-year limit before January 1, 2026, or will expire within one year from that date, the amendments offer an extension. These taxpayers will be permitted to submit refund requests up to one year from the start of 2026. Moreover, if the FTA has not yet issued a decision on these claims, voluntary disclosures may be filed within two years from the date of submission, ensuring fairness and flexibility throughout the process.

These transitional provisions are designed to provide taxpayers with the time they need to comply with the new rules and submit claims for refunds. The flexibility built into these amendments ensures that businesses and individuals have adequate opportunities to manage their tax obligations without unnecessary pressure.

Promoting Economic Growth

The UAE Ministry of Finance emphasized that the changes align with the country’s commitment to international best practices in financial and tax policy. These amendments are not just about improving the tax system’s efficiency; they are also designed to foster a stable and conducive business environment. By enhancing the ease of doing business, reducing administrative burdens, and providing greater certainty in tax matters, the amendments will boost business confidence and support sustainable economic growth.

Additionally, these changes are expected to improve the public revenue system by streamlining tax procedures, making them more efficient and transparent. By aligning with international tax standards, the UAE aims to position itself as a reliable and attractive location for global businesses, further boosting its economic prospects.

The amendments to the UAE’s tax procedures are a significant step forward in enhancing the efficiency and fairness of the tax system. By offering clear guidelines for refund requests, expanding the FTA’s authority, and introducing flexible transitional provisions, these changes are set to provide greater clarity and certainty for both taxpayers and the government. The ongoing improvements to the tax system will contribute to a stronger economy, foster business growth, and enhance the country’s reputation as a leading global financial hub.