The Ministry of Finance has announced the issuance of Federal Decree Law No. (16) of 2025, which amends certain provisions of Federal Decree Law No. (8) of 2017 concerning Value Added Tax (VAT). This new regulation will come into effect on January 1, 2026, as part of the United Arab Emirates’ ongoing efforts to enhance the tax system and strengthen its administrative and supervisory efficiency.
The main purpose of these amendments is to simplify tax procedures for taxpayers while ensuring transparency and adherence to international standards. The changes include an exemption for taxpayers from having to issue self-invoices when applying the reverse charge mechanism. However, they are required to retain supporting documentation for supplies as specified by the executive regulation. This approach aims to improve administrative efficiency, provide clear evidence during audits, and reduce procedural burdens.
Additionally, the amendments set a deadline of no more than five years for submitting requests for refunds of any excess tax after offsetting, meaning the right to a refund will expire after this period. This rule is designed to minimize the accumulation of old balances, promote financial certainty and fairness among taxpayers, and align with international best practices in managing refund processes and reviewing balances.
### Strengthening Governance
In another initiative to enhance the fight against tax evasion, the amendments grant the Federal Tax Authority the authority to deny input tax deductions if it is determined that the supply is part of a tax evasion scheme. Taxpayers will be required to verify the validity and integrity of supplies before deducting tax, following the procedures and measures outlined by the Authority. This supports shared responsibility and strengthens governance in the supply chain, protecting public revenues.
The Ministry of Finance emphasized that these amendments are part of the country’s broader efforts to develop the tax system and ensure a fair and transparent environment that facilitates compliance while achieving financial and administrative efficiency. This, in turn, contributes to the sustainability of public resources and enhances the competitiveness of the national economy.