Post by : Bianca
Haleem
The Ministry of Finance has revealed essential amendments to the UAE’s tax procedures law, bringing forth clearer guidelines regarding tax obligations, refund periods, and limitation durations. These revisions, established under Federal Decree-Law No. (17) of 2025, will officially become effective on 1 January 2026.
With the updated framework, taxpayers will now have a five-year window following the conclusion of the relevant tax period to request a refund for any credit balance held with the Federal Tax Authority (FTA) or to apply it against outstanding tax obligations. This organized timeframe aims to minimize uncertainty and foster better financial discipline within tax-related operations.
Additionally, provisions have been made for scenarios where a credit balance arises after the five-year period or within the final ninety days of it, allowing eligible taxpayers to still submit refund requests without losing their entitlement due to timing restrictions.
Another significant modification expands the rules regarding limitation periods. The FTA is now empowered to carry out tax audits or issue tax assessments even after the usual limitation period has lapsed, under certain defined conditions—such as when a refund request is made in the last year of that period. This aims to ensure fairness for taxpayers while also safeguarding the state's financial interests.
Furthermore, the Authority has gained the ability to issue binding guidelines concerning the interpretation of tax legislation. These guidelines will serve to assist both the taxpayers and the Authority, ensuring consistent interpretation and practical application across different tax situations.
The amendments also feature transitional measures for taxpayers whose credit balance timelines have either already expired or are approaching expiration. Those whose five-year period concluded before 1 January 2026—or will conclude within one year after that date—will have a one-year period starting 1 January 2026 to file refund requests. Additionally, they can submit voluntary disclosures linked to those requests within a two-year frame, provided no decisions have been rendered yet.
Through these revisions, the UAE strives to enhance transparency, streamline tax processes, and create a more efficient business setting—all aligning with the nation's broader goal of modernizing its financial frameworks and ensuring long-term economic sustainability.
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