Overview of the UAE VAT Law Amendments Effective 2026
The UAE has consistently optimizing its Tax infrastructure and improving tax laws based on international standards. The UAE Ministry of Finance has announced the issuance of Federal Decree-Law No. (16) of 2025, introducing key amendments to Federal Decree-Law No. (8) of 2017 on Value Added Tax (VAT).
The amendment will take effect starting from 1st January 2026, a significant step towards modernising its tax framework and strengthen regulatory oversight.
Simplifying VAT Compliance and Enhancing Transparency
The key aspect of these amendments are to streamline the VAT procedures for taxable person while reinforcing transparency and alignment with international standards. One of the most important changes is the removal of the requirement to issue self-invoices when applying the reverse charge mechanism. As alternative, businesses will be required to maintain appropriate supporting documents related to supply transactions as mentioned in the executive regulations.
Reduced Compliance Burden for Businesses: All these changes will results in a relief for businesses in terms of reducing administrative burden, help them improve operational efficiency. It also ensures availability of clear and reliable audit evidence benefiting both tax payers and regulators.
Time Limit Introduced for VAT Refund Claims
The amended law also introduces a five-year statutory time limit for submitting requests to reclaim excess refundable VAT after reconciliation. Upon the expiry of this period, the right to recover the tax will be lost
Improved Financial Certainty: The aim of this measure is to prevent the accumulation of long outstanding refund balances and to provide more clarity in terms of finances for both tax payers and the authority. This will also enhance the fairness across the tax system. This measure also reflects the international standards defined for managing the refund and balance reviews.
Stronger Measures to Combat Tax Evasion
One of the key aspects of these amendments is to strengthen the tax governance and combat abusive practices. These changes will empower Federal Tax Authority (FTA) todeny input VAT deductions where a transaction might be deemed as a part of tax evasion arrangement.
Enhanced Audit Readiness: All these measures are to encourage taxpayers to conduct due diligence and verify the legitimacy of their supply chains before claim input tax deductions. This added responsibility will ensure compliance discipline, enhance integrity and safeguards public revenues. Clear documentation requirements provide stronger audit trails and reduce disputes during VAT audits and reviews.
Supporting Economic Sustainability
The Ministry of Finance emphasised that these amendments reflect the UAE’s commitment to maintaining a fair, efficient, and transparent tax environment. By reducing procedural complexity, strengthening enforcement mechanisms, and aligning with global standards, the changes contribute to the sustainability of public resources and further enhance the competitiveness of the UAE’s national economy.
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