Tax News: Amendments to VAT, Excise tax law and Tax procedures law

On 25 November 2025, the UAE Ministry of Finance (‘MoF’) has released Federal Decree-Law No. 16 of 2025, which updates various articles of Federal Decree-Law No. 8 of 2017 (‘VAT Law’). Concurrently, the MoF issued Federal Decree-Law No. 17 of 2025, introducing changes to certain provisions of Federal Decree-Law No. 28 of 2022 (‘Tax Procedures Law’) and Federal Decree- Law No. 7 of 2017 (‘Excise Tax Law’).

These amendments are scheduled to come into force from 01 January 2026 onwards.

These legislative updates aim to enhance the clarity and efficiency of tax administration, simplify compliance obligations, and provide detailed guidance on the treatment of Input Tax, excess credits, and refund claims. In addition, the changes include strengthened anti-tax-evasion measures and specific rules regarding the statute of limitations for audits and assessments.

Summary of the key amendments is as follows:

Article No.	Topic	Amendments
Amendments in VAT Law
Article 48 -  Clause 1	Reverse Charge	Taxpayers are relieved from the requirement to self-issue tax invoices on the import of goods or services used in business.
Article 54 (bis)	Recoverable Input Tax	In cases of informed tax evasion, the updated Article casts the onus on receiver of supply. The FTA empowered to disallow Input Tax deductions if the supply is part of a chain linked, ought to have known or that the supply was connected to tax evasion to tax evasion and the taxpayer was aware of this connection at the time of claiming the deduction. A taxpayer will be deemed to have been aware of the link to tax evasion if they fail to verify the validity and integrity of the received supplies before claiming the Input Tax, in line with the measures, procedures, and conditions established by the FTA. BDO caution-tip Business should ensure that robust verification procedures are in place when claiming Input Tax, particularly for suppliers or transactions that may carry a higher risk of tax evasion. Adequate controls, documentation and compliance with FTA procedures are critical to safeguarding Input Tax recovery.
Article 74 – Clause 3	Excess Recoverable Tax	Any excess recoverable Input Tax may be carried forward for a period not exceeding 5 years from the conclusion of the tax period in which it arose, thereby instituting a definitive statute of limitations for the utilization or recovery of such amounts. Upon the expiration of this 5-year period, any remaining Input Tax credit shall be deemed time-barred and may no longer be applied, offset, or claimed as a refund. BDO caution-tip Businesses with historical excess Input Tax or pending refund claims should review their balances and ensure they are either used to offset VAT liabilities or submitted for refund before the 5-year limitation period expires to avoid losing any unclaimed amounts.
Article 79 (bis)	Statue of Limitations	The UAE VAT Law no longer includes a statute of limitations, and the provisions set forth in the Tax Procedures Law will now take precedence.
Amendments in Tax Procedures Law
Article 9	Determination of Payable Tax	FTA is required to apply any excess Input Tax credits or overpayments to settle tax or penalty obligations within 5 years from the end of the relevant tax period, in line with the statute of limitations established under the amended Federal Decree-Law on VAT. Previously, no time limit was applicable. If the credits or overpayments are not utilized within this 5-year period, they may no longer be applied to offset outstanding tax liabilities. The Tax Procedures Law is applicable for VAT, Corporate Tax and Excise tax. All changes to the Tax Procedures Law summarized below will be applicable to these three Tax laws. BDO caution-tip In the future, it will be worth observing whether the FTA allows tax balances to be used interchangeably across CT, VAT, and Excise Tax to offset obligations.
Article 10 – Clause 5	Voluntary Disclosure	If a taxpayer identifies an error or omission in a submitted tax return that does not affect the amount of tax due: The error must be corrected by submitting a Voluntary Disclosure in cases specified by the FTA. In all other cases, the error can be corrected through an amended Tax Return.
Article 38	Application for Refund of Credit Balance	The updated Tax Procedures Law clarifies the rules for claiming tax (‘Corporate tax, Excise tax and VAT’) refunds. Taxpayers are entitled to request a refund for any credit balance held with the FTA, provided that the balance exceeds any outstanding tax and administrative penalties. A refund request must be submitted within 5 years from the end of the relevant tax period. This amendment provides clear guidance and a defined timeframe for taxpayers to claim refunds while ensuring consistency with the statute of limitations. The update introduces new clauses to address refund requests arising after the standard 5-year period or near its expiry, providing clear timelines for taxpayers: FTA Decision-Based Credits: If a credit balance arises from a decision issued by the FTA after the expiry of the five-year period, or within the last 90 days of that period, the taxpayer may submit a refund request within one year from the date the credit balance arose. Other Cases: For all other situations where the credit balance arises after the five-year period or during the last 90 days of the period, the taxpayer may submit a refund request within 90 days from the date the credit balance arose. FTA Review: The FTA is required to review all refund requests submitted under these provisions and notify the taxpayer of its decision, either approving or rejecting the claim. Expiry of Refund Rights: If a refund request is not submitted within the specified timelines, the taxpayer’s right to claim the refund of any overpaid tax or credit balance expires permanently. Transitional relief: The FTA has introduced transitional relief for Taxpayers whose 5-year refund or credit period has expired, or will expire within 1 year of the Decree-Law’s effective date, may still claim a refund or apply the balance against tax or penalties if submitted within one year from 1 January 2026. BDO caution-tip Taxpayers have window till 31 December 2026 to submit refund requests or adjust the excess recoverable VAT pertaining to the tax periods ending in FY 2018 to FY 2021.
Article 46	Statute of Limitation	The standard limitation period for conducting tax audits and issuing assessments remains five years from the end of the relevant tax period. However, the period of limitation is extended in the following cases:   Scenario Tax Audit to be completed Notification of Tax Audit received before expiry of five years from the end of Tax period Within 4 years from the date of notification of Tax Audit Voluntary disclosure application submitted in the fifth year from the end of the Tax period Within 1 year from the date of submission of voluntary disclosure. Refund application is submitted in the fifth year from the end of the tax period Within 2 years from the date of submission of refund application Refund application is submitted during the period mentioned under Article 38(3) and 38(4) of the Tax Procedures Law Within 2 years from the date of submission of refund application Tax Evasion Within 15 years from the end of the Tax period in which the Tax evasion occurred Tax Registration failure Within 15 years from the date on which the Taxable person should have registered. Any refund application under the transitional relief Within 2 years from the date of submission of refund application
Article 54 (bis)		The updated Tax Procedures Law empowers the FTA to issue official guidelines clarifying the practical application of the Tax Laws (VAT, Excise Tax and Corporate Tax) and Tax Procedures Law, including guidance on specific tax transactions which is binding on both the FTA and the taxpayers.
Amendments in Excise Law
Article 25 (bis)	Statute of Limitation	The Article is no longer in force. The statute of limitation as per Tax Procedures Law will apply to Excise Tax.

Our comments

The amendments to the VAT Law and Tax Procedures Law will promote transparency and efficiency in UAE VAT compliance. By clarifying rules on Input Tax recovery, refunds, voluntary disclosures, audit periods, and anti-evasion, they provide businesses with a clear framework to manage the tax obligations.
Businesses should proactively review historical credit balances, pending refunds, and compliance processes especially where the 5-year limitation is nearing to prevent loss of recoverable amounts.

The expanded audit and anti-evasion provisions also highlight the importance of strong internal controls and proper documentation.

How BDO can help?

BDO can help you in navigating the changes related to Tax refund, audit/ assessment and other procedures effectively. By leveraging our expertise, your business can minimize compliance risks, optimize Tax refunds, and maintain full alignment with the latest UAE Tax regulations, ensuring both operational efficiency and regulatory compliance.

Feel free to reach out to our tax experts for support in addressing these matters.