Post by : Badri Ariffin

The Ministry of Finance has revealed crucial modifications to the UAE's tax procedures law, aimed at clarifying tax obligations and refund protocols. These revisions, effective from January 1, 2026, are established under Federal Decree-Law No. (17) of 2025.

Under the new regulations, taxpayers will have a five-year period post the relevant tax cycle to seek refunds on any available credit with the Federal Tax Authority (FTA) or to offset that credit against unpaid tax dues. This structured timeline is intended to minimize uncertainty and foster fiscal discipline.

The amendments also provide leeway for cases where a credit balance arises after the stipulated five-year limit or within the final ninety days of that period, ensuring that taxpayers can submit refund claims without losing their rights due to time limitations.

Another important update allows the FTA to extend audit and assessment authority beyond the usual limitation periods in defined circumstances, particularly when refund requests are lodged in the final year of such periods. This aims to balance taxpayer rights with the need to protect government financial interests.

Additionally, the FTA is now empowered to issue obligatory directives regarding the application of tax laws. These directives are intended to provide guidance for both taxpayers and the FTA to ensure uniform interpretation and practical execution across diverse tax scenarios.

Transitional measures have also been included for taxpayers whose refund timelines have expired or are nearing expiration. Those whose five-year refund eligibility ends prior to January 1, 2026, or will conclude within a year of that date, may submit refund applications during a one-year window starting from January 1, 2026. They can also make voluntary disclosures about these refunds within a two-year timeframe, provided no decision has yet been made.

These revisions are aligned with the UAE’s ongoing efforts to enhance transparency, simplify tax procedures, and foster a more conducive business atmosphere, supporting the country’s broader mission to modernize its financial systems and secure long-term economic growth.

#Global News