UAE introduces changes to tax rules starting January 2026

November 29, 2025 | 15:06  

Lekshmy Pavithran, Assistant Online Editor

The UAE Ministry of Finance has issued Federal Decree‑Law No. 17 of 2025 amending parts of Federal Decree‑Law No. 28 of 2022 (Tax Procedures Law). The changes take effect on 1 January 2026. 

Under the new law, a defined five-year limitation period will apply: taxpayers have up to five years from the end of the relevant tax period to request a refund of credit balances or to use those balances to settle tax liabilities. 

Transitional provisions will allow taxpayers whose five-year period expired before 1 January 2026 or will expire within one year after to submit refund requests by 31 December 2026. Voluntary disclosures related to those requests can be submitted within two years after filing, if a decision has not yet been issued. 

In some specific cases such as credit-balance refunds arising after the five-year window, or within its final 90 days taxpayers will get extra flexibility to submit refund requests. 

The reforms are meant to give greater clarity around taxpayer rights and obligations, especially regarding refunds and liability-settlements. 

They also aim at boosting transparency, financial discipline, and fairness in tax procedures, reducing administrative ambiguity and aligning with international best practices. 

By clarifying procedures and timelines, the amendments are expected to improve the overall business environment and foster trust between businesses and the tax authority. 

Businesses or individuals with credit balances owed by the Federal Tax Authority (FTA) should check if the relevant tax period ended within the past five years, they now have a firmer statutory window to request refunds or offset liabilities.

Those whose refund-claim period had already expired before 2026 get a grace period (up to end of 2026) to make claims so it’s worth reopening housekeeping/tax reconciliation records.

The extra flexibility for late refund requests in certain conditions offers some protection, but businesses should act proactively to avoid missing deadlines.

Overall, the changes reduce uncertainty and leave less room for disputes  which can save time, legal fees, and administrative hassle.

These changes are part of a broader wave of tax-policy updates in UAE in recent years, including corporate tax laws, excise taxes, and compliance frameworks. 

The broader aim appears to be to modernize the tax system and align it with international standards making the UAE more attractive for business and investment in the long run.