Regulatory & Legal Updates

Federal Decree-Law No. 17 of 2025 – Amendments of the Federal Decree-Law No. (28) of 2022 on Tax Procedures

Effective Date: 1 January 2026.

Details:

• Federal Decree-Law No. (17) of 2025 amends certain provisions of Federal Decree-Law No. (28) of 2022 on Tax Procedures. The amendments aim to establish a clearer and more structured legal framework for tax obligations and procedures, enhance financial discipline, and regulate the statutory timeframes applicable to tax refunds, audits, and assessments.

Key Amendments:

• Introduction of a five (5) year period from the end of the relevant tax period to request a refund of a tax credit balance or to use such balance to settle tax liabilities.
• Allowance of limited cases where a refund request may be submitted if the credit balance arises after the expiry of the five-year period or within the last ninety (90) days of that period, subject to specific conditions.
• Granting the Federal Tax Authority the power to conduct tax audits or issue tax assessments after the expiry of the limitation period in certain cases, including where a refund request is submitted in the final year of the limitation period.
• Granting the Federal Tax Authority the power to issue official and binding directions regarding the application of tax legislation to tax transactions. 
• Introduction of transitional provisions allowing taxpayers, whose five-year refund period expired before 1 January 2026 or will expire within one year from that date, to submit a refund request within one year from 1 January 2026, and to submit a related voluntary disclosure within two years from the refund request date.

Impact:

• Provides clear statutory time limits for submitting tax refund requests.
• Allows the FTA to continue audits and issue assessments in limited post-limitation cases
• Enables binding official guidance on the application of tax legislation.
• Allows taxpayers with existing credit balances additional time to submit refund and disclosure requests under the transitional provisions.

Applicability:

• The amendments apply to all taxpayers subject to the UAE Tax Procedures Law, including those registered for Corporate Tax, VAT Tax and Excise Tax.

Compliance Tips:

• Review all existing tax credit balances and identify those approaching the five-year limit.
• Track refund requests in line with the new statutory timeframe.
• Maintain proper records and documentation for any refund or voluntary disclosure submissions.
• Monitor any official directions issued by the FTA regarding the application of the amended provisions.

Federal Decree-Law No. 16 of 2025 – Amendments of Federal Decree-Law No. (8) of 2017 on Value Added Tax

Effective Date: 1 January 2026.

Details:

• Federal Decree-Law No. (16) of 2025 amends certain provisions of Federal Decree-Law No. (8) of 2017 on Value Added Tax. The amendments form part of the UAE’s ongoing efforts to develop its tax system and enhance administrative and regulatory efficiency.

Key Amendments:

• Relief of taxable persons from issuing self-invoices when applying the reverse charge mechanism, while requiring them to retain supporting documents related to supply transactions, as specified by the Executive Regulation.
• Establishment of a five (5) year time limit for submitting requests to reclaim any excess refundable tax after reconciliation.
• Expiry of the right to reclaim refundable tax once the five-year period has elapsed.
• Authorization of the Federal Tax Authority (FTA) to deny the deduction of input tax where the supply forms part of a tax-evasion arrangement.
• Requirement for taxpayers to verify the legitimacy and integrity of supplies before deducting input tax, in line with the procedures and measures set out by the FTA.

Impact:

• Enhances administrative efficiency, provides clear audit evidence, and reduces procedural burdens.
• Prevents the build-up of old refundable balances and strengthens financial certainty.
• Promotes fairness among taxpayers and reinforces shared responsibility across the supply chain.
• Strengthens governance and safeguards public revenue.
• Supports the sustainability of public resources and bolsters the competitiveness of the national economy.

Applicability:

• This Federal Decree-Law applies to taxable persons subject to the UAE Value Added Tax regime.

Compliance Tips:

• Retain supporting documents related to supply transactions when applying the reverse charge mechanism.
• Submit refund requests for excess refundable tax within the five-year time limit following reconciliation.
• Verify the legitimacy and integrity of supplies before deducting input tax.
• Follow the procedures and measures set out by the FTA when claiming input tax deductions.

Federal Tax Authority Decision No. (8) of 2025 – Timelines for Qualifying Investment Funds & Investors

Effective Date: Issued 18 September 2025 (Tax Period commencing on or after 1 January 2025).

Details:

• This Decision is issued for the purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. It determines the timelines of tax compliance requirements for Qualifying Investment Funds, Real Estate Investment Trusts (REITs) and investor in such Funds and REITs.

Key Provisions:

• Foreign juridical persons with a UAE nexus investing in Qualifying Investment Fund or REIT must submit a Tax Registration application within twelve (12) months from the end of the Fund’s Financial Year in certain cases.
• In other nexus cases, the Tax Registration application must be submitted within three (3) months from the end of the Financial Year during which the nexus is established.
• Taxable Persons adjusting their Taxable Income must file the Tax Return within the later date of:
• Twelve (12) months from the end of the Fund’s Financial Year; or
• Nine (9) months from the end of the relevant Tax Period.
• Corporate Tax Payable must be settled within the same later of the two periods.
• Qualifying Investment Funds must provide tax information to investors within:
• Six (6) months; or
• Nine (9) months, as applicable.
• Exempt Qualifying Investment Funds and REITs must submit an annual exemption declaration within ten (10) months from the end of the Financial Year.
• Juridical persons ceasing to have a nexus and ownership interest must submit a Tax Deregistration application within three (3) months after the end of the twelve-month cessation period.

Impact:

• This Decision sets legally binding timelines for: Tax registration, Filing of Corporate Tax returns, Settlement of Corporate Tax Payable, Investor information reporting, Submission of exemption declarations, Tax deregistration procedures

Applicability:

• This Decision applies to Tax Periods commencing on or after 1 January 2025.
• Qualifying Investment Funds, Real Estate Investment Trusts and Investor in such entities.

Compliance Tips:

• Monitor the creation of a UAE nexus to determine applicable tax registration deadlines.
• Ensure Tax Returns and Corporate Tax payments are submitted within the later of the prescribed nine (9) or twelve (12) months periods.
• Ensure required tax information is provided to investors within the prescribed six (6) or nine (9) month periods.
• Ensure annual exemption declarations are submitted within ten (10) months.
• Submit tax deregistration within three (3) months after the cessation period ends.

Federal Tax Authority Decision No. (9) of 2025 – Conditions for Declining the Refund of Residual Amounts

Effective Date: 1 January 2026 (Issued on 4 December 2025)

Details:

• This Decision sets out the conditions under which the Federal Tax Authority (FTA) may decline the refund of residual amounts related to a refund request where the Person is subject to a Tax Audit.

Key Provisions:

• The FTA may decline to refund residual amounts where there is sufficient evidence supporting the possibility that significant tax liabilities may arise based on the Tax Audit.
• Where there are sufficient grounds to believe that the Person is involved in Tax Evasion.
• Where the refund request relates to Goods suspected of being part of Tax Evasion within the supply chain.
• Where the Taxable Person has outstanding Tax Returns in respect of any type of Tax.
• Where the Person fails to provide the information requested by the Authority regarding the Tax Audit within the specified timeline.
• Where the Person fails to cooperate with the Authority in any manner regarding their obligations during the Tax Audit.

Impact:

• This Decision sets out the cases in which the FTA may decline the refund of residual tax amounts during a Tax Audit in specified cases.
• Refunds may be withheld where potential tax liabilities, tax evasion risks, non-compliance, or lack of cooperation exist.

Applicability:

• This Decision applies to Persons subject to Tax Audit who have submitted a refund request for residual amounts.
• It applies across all applicable UAE taxes, including Excise Tax, VAT and Corporate Tax.

Compliance Tips:

• Ensure that all Tax Returns are duly filed for all types of Tax.
• Provide all information requested by the FTA during a Tax Audit within the specified timelines.
• Fully cooperate with the FTA throughout the Tax Audit process.
• Ensure that refund requests do not relate to Goods suspected of Tax Evasion within the supply chain.

Cabinet Decision No. 106 of 2025 on the Violations and Administrative Penalties Resulting from Violation of the Legislation Regulating the Electronic Invoicing System

Effective Date: From the day following its publication in the Official Gazette.

Details:

• This Cabinet Decision sets out the administrative penalties applicable to violations of the legislation regulating Electronic Invoicing System. The Decision is issued pursuant to Federal Decree-Law No. 28 of 2022 on Tax Procedures and applies to breaches related to the mandatory implementation and operation of Electronic Invoices and Electronic Credit Notes.

Key Provisions:

• Failure by the Issuer to implement the Electronic Invoicing System, including failure to appoint an Accredited Service Provider within the prescribed timeline, is subject to a penalty of AED 5,000 per month of delay.
• Failure by the Issuer to issue and transmit an Electronic Invoice within the prescribed timeline is subject to a penalty of AED 100 per invoice, capped at AED 5,000 per calendar month.
• Failure by the Issuer to issue and transmit an Electronic Credit Note within the prescribed timeline is subject to a penalty of AED 100 per credit note, capped at AED 5,000 per calendar month.
• Failure by the Issuer to notify the Federal Tax Authority of a System Failure within the prescribed timeline is subject to a penalty of AED 1,000 per day of delay.
• Failure by the Issuer or the Recipient to notify the Accredited Service Provider of changes to registered data within the prescribed timeline is subject to a penalty of AED 1,000 per day of delay.

Impact:

• This Decision establishes a clear penalty framework governing non-compliance with the Electronic Invoicing System
• It strengthens enforcement of mandatory e-invoicing obligations for Issuers and Recipients.
• Continuous non-compliance may result in accumulating daily and monthly penalties, increasing financial exposure.

Applicability:

• This Decision applies to Persons subject to the legislation regulating the Electronic Invoicing System.
• It applies to Issuers and Recipients who are legally required to issue, transmit, receive or report Electronic Invoices and Electronic Credit Notes.

Compliance Tips:

• Ensure timely appointment of an Accredit Service Provider.
• Issue and transmit Electronic Invoices and Electronic Credit Notes within the prescribed timelines.
• Update the Accredit Service Provider of any changes to registered data without delay.
• Maintain robust internal controls to avoid daily and monthly accumulating penalties.

Cabinet Decision No. 197 of 2025 on Excise Goods, Tax Rates or Amounts Imposed on Excises Goods and the Methods of Calculating the Excise Price

Effective Date: 1 January 2026 (Issued 27 November 2025)

Details:

• The Cabinet Decision No. 197 of 2025 replaces/repeals Cabinet Decision No.52 of 2019 and sets out an updated regulatory framework governing Excise Goods, applicable Excise Tax rates, and the methods for calculating the Excise Price.
• The Decision issued pursuant to Federal decree-Law no. 7 of 2017 on Excise Tax and introduces a refined excise regime, particularly for sweetened drinks, based on sugar and sweetener content.

Key Provisions:

• This Decision introduces fixed Excise Tax amounts for sweetened drinks based on sugar or sweetener content per 100 ml:
• AED 0.79 per litre where sugar content is 5g to less than 8g
• AED 1.09 per litre where sugar content is 8g or more
• 0 Excise Tax where sugar content is less than 5g or where only artificial sweeteners are used.
• Excludes certain products from the definition of sweetened drinks, including:
• Beverages containing at least 75% milk or milk substitutes: (1) Baby formula and baby food, (2) Beverages for special dietary or medical use, (3) Sweetened drinks prepared in restaurants and served in open containers
• Federal Tax Authority has the power to: (1) Require laboratory reports and documentation to verify product classification and (2) Apply the highest applicable tax bracket where sugar content is not substantiated

Impact:

• The Decision reshapes the Excise Tax treatment of sweetened beverages, shifting from percentage-based taxation to sugar-content-based fixed rates
• Businesses in the food & beverage, retail, manufacturing, and import sectors will face increased compliance and reporting obligations.
• Failure to substantiate sugar content may result in higher Excise Tax exposure through default application of the highest tax category.

Applicability:

• This Decision applies to Taxable Persons registered or required to register for Excise Tax.
• Importers, producers and distributors of Excise Goods in the UAE.
• Businesses involved in the manufacture, import, or sale of sweetened drinks, energy drinks, tobacco products and electronic smoking products.

Compliance Tips:

• Review product formulations and confirm sugar and sweetener content per 100 ml.
• Obtain and maintain FTA-accepted laboratory reports for sweetened drinks.
• Update pricing, labelling, and ERP systems to reflect the new Excise Tax structure.
• Implement internal controls to ensure correct Excise classification and reporting.

Cabinet Decision No. 65 of 2020 on FTA Services Fees and its amendments

(Cabinet Decision No. 174 of 2025)

Effective Date: 1 January 2026

Details:

• Cabinet Decision No. 174 of 2025 introduces new service fees under the existing framework of Cabinet Decision No. 65 of 2020 relating to fees charged by the Federal Tax Authority (“FTA”)
• The 2025 amendments specifically expand the FTA’s fee schedule to cover Advance Pricing Agreement (APA) services, reflecting the increasing relevance of transfer pricing and advance tax certainty mechanisms under the UAE Corporate Tax regime.

Key Amendments:

• Introduces a new fee of AED 30,000 for the submission of a request to conclude a unilateral Advance Pricing Agreement (APA) for the first time, marking the introduction of APA-related fees under the FTA service fee framework.
• Introduces a new fee of AED 15,000 for the submission of a request for the renewal or amendment of an existing unilateral Advance Pricing Agreement, constituting a newly chargeable service effective from 2026.

Impact:

• The amendments introduce a cost consideration for taxpayers seeking advance transfer pricing certainty through a unilateral Advance Pricing Agreement.

Applicability:

• These amendments apply to Taxable Persons seeking to enter into a unilateral Advance Pricing Agreement with the FTA.
• Taxable Persons requesting the renewal or amendment of an existing unilateral APA.