The Ministry has issued Federal Decree-Law No. (16) of 2025 to amend specific provisions within the existing Value Added Tax law, with the changes taking effect on January 1, 2026. The update comes as part of the UAE’s ongoing effort to strengthen the tax system, and it also aims to boost administrative and regulatory efficiency. Moreover, the amendments seek to simplify procedures for taxpayers while supporting transparency and alignment with international standards.
Key Changes to Procedures and Compliance
Under the new rules, taxable persons no longer need to issue self-invoices when applying the reverse charge mechanism. Instead, they must keep all supporting documents related to supply transactions as outlined in the Executive Regulation. As a result, administrative processes become smoother while still offering clear audit evidence and reducing procedural burdens.
Additionally, the amendments introduce a five-year time limit for submitting requests to reclaim excess refundable tax after reconciliation. After this period ends, the right to reclaim the amount expires. This measure prevents the accumulation of outdated balances, promotes fairness, and increases financial certainty across the system.
Strengthening Oversight and Tax Governance
To further combat tax evasion, the amendments grant the tax authority the power to deny input tax deductions if a supply is linked to an arrangement intended to evade tax. Therefore, taxpayers must verify the legitimacy and integrity of all supplies before claiming input tax, following the procedures set by the authority. This approach reinforces shared responsibility, strengthens governance throughout the supply chain, and protects public revenue.
The Ministry stated that these amendments support the nation’s efforts to create a transparent and fair compliance environment while improving both financial and administrative efficiency. Ultimately, these measures help sustain public resources and enhance the overall competitiveness of the national economy.
