The Ministry of Finance has issued Federal Decree-Law No. (16) of 2025 amending key provisions of the VAT Law (Federal Decree-Law No. 8 of 2017), effective January 1, 2026. The update supports the UAE’s efforts to enhance its tax system and improve administrative and regulatory efficiency.
The amendments simplify procedures by removing the requirement for taxable persons to issue self-invoices under the reverse charge mechanism, while still requiring them to keep supporting documents as outlined in the Executive Regulation. This reduces procedural burdens and ensures clear audit evidence.
A new five-year time limit has been set for reclaiming excess refundable tax after reconciliation. After this period, the right to claim expires, preventing the accumulation of old balances and promoting financial certainty and fairness.
To combat tax evasion, the Federal Tax Authority is now authorised to deny input tax deductions if a supply is linked to a tax-evasion arrangement. Taxpayers must verify the legitimacy of supplies before claiming input tax, reinforcing shared responsibility and stronger governance across the supply chain.
The Ministry emphasised that these changes enhance transparency, strengthen compliance, and support the sustainability of public finances while boosting the competitiveness of the national economy.
