The Ministry of Finance has issued Federal Decree-Law No. (16) of 2025, amending some parts of Federal Decree-Law No. (8) of 2017 concerning Value Added Tax, coming into effect on January 1, 2026.
This initiative is part of the UAE’s continuous efforts to refine its tax system and boost efficiency in administration and regulation.
The amendments are designed to streamline tax processes for taxpayers, ensuring transparency and alignment with international standards.
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The changes relieve taxable persons from the need to issue self-invoices when using the reverse charge mechanism, while mandating the retention of supporting documents for supply transactions as specified in the Executive Regulation.
This improvement not only enhances administrative efficiency but also ensures clear audit trails and reduces procedural burdens.
The amendments impose a five-year deadline for filing requests to reclaim excess refundable tax after reconciliation.
Once this period lapses, the right to reclaim the tax expires, preventing the accumulation of old balances, enhancing financial certainty, and ensuring fairness among taxpayers, in adherence to international best practices for refund processes and balance reviews.
Additionally, to combat tax evasion, the amendments empower the Federal Tax Authority (FTA) to deny input tax deductions if it identifies the supply as part of a tax-evasion scheme.
Taxpayers must verify the legitimacy of supplies before deducting input tax, following FTA’s procedures and measures. This policy promotes shared responsibility, strengthens supply chain governance, and protects public revenue.
The Ministry of Finance highlighted that these amendments support the UAE’s ongoing efforts to improve the tax system, ensure a fair and transparent environment, and promote financial and administrative efficiency.
These measures further sustain public resources and enhance the national economy’s competitiveness.
