UAE taxpayers can claim credit refunds starting January 2026 under new law

The UAE will implement changes in Tax Procedures Law starting January 1 2026 “to enhance the tax system and boost transparency and fairness in tax transactions,” the Ministry of Finance (MoF) announced on Saturday (November 29).

The amendments set a period not exceeding five years from the end of the relevant tax period for requesting the refund of a credit balance from the Federal Tax Authority (FTA) or for using that balance to settle tax liabilities.

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“This provides a clear timeframe for organising such financial processes, while granting additional flexibility to submit a refund request if the credit balance arises after the five-year period has elapsed or within the last 90 days of that period (in specific cases), ensuring taxpayers’ rights and strengthening financial certainty,” MoF noted.

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Taxpayers who have credit balances with FTA, where the related five-year period expired before January 1 2026 or will expire within one year from that date, can submit refund requests within one year from January 1 next year.

“They may also submit a voluntary disclosure related to that request within two years from the date of filing the request, if the FTA has not yet issued a decision on it. This ensures tax fairness and enables all previous requests to be addressed in a fair and flexible manner,” MoF noted.

Tax audits

MoF added the amendments also expand the provisions related to limitation periods, granting the FTA the power to conduct tax audits or issue tax assessments after the expiry of the limitation period in certain cases, such as refund requests submitted in the final year of the limitation period, to ensure a balance between protecting taxpayers’ rights and safeguarding the state’s financial entitlements.

The amendments also grant the FTA the power to issue official and binding directions to taxpayers and to the Authority itself regarding the application of tax legislation to tax transactions, “without prejudice to the provisions of applicable tax laws,” MoF underscored, explaining: “This facilitates practical implementation, unifies interpretation, and reduces risks arising from inconsistencies in handling different cases.”

Angel Tesorero

angel@khaleejtimes.com

Angel Tesorero is Assistant Editor and designated funny guy in the newsroom, but dead serious about writing on transport, labour migration, and environmental issues. He is a food lover too.