In a recent announcement, the Ministry of Finance has unveiled important amendments to the tax procedures law in the UAE. These modifications aim to clarify tax obligations, refund timelines, and limitation periods, set to be effective on 1 January 2026 under Federal Decree-Law No. (17) of 2025.
According to the new guidelines, taxpayers will now have a maximum period of five years from the conclusion of the applicable tax period to request any refunds of credit balances with the Federal Tax Authority (FTA). This structured timeframe is intended to mitigate ambiguity and enhance financial discipline in tax matters.
Additionally, the amendments provide flexibility for those cases where a credit balance occurs post the five-year window or within the last ninety days of that period. This ensures taxpayers can still make refund requests without being penalized due to timing issues.
A notable update includes changes to limitation-period rules, allowing the FTA to perform tax audits or issue assessments even after typical deadlines, particularly when refund requests are made during the last year of the limitation period. This aims to balance taxpayer protections while safeguarding state financial interests.
Moreover, the Authority is empowered to issue binding directives on tax legislation application, which will help in providing clarity and consistency in the interpretation of tax laws.
The recent amendments also incorporate transitional provisions for taxpayers whose credit balance timelines are nearing expiration. Those with five-year periods concluding before 1 January 2026, or those ending within a year after that date, will have a one-year period post-1 January 2026 to submit refund claims. They may also file voluntary disclosures about these requests within two years, as long as no decisions have been made.
Through these updates, the UAE aims to enhance transparency, streamline tax operations, and cultivate a more efficient business climate—aligning with its broader objectives of modernizing financial systems for enduring economic stability.
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