The UAE has announced a new set of amendments to its Tax Procedures Law through Federal Decree-Law No. 17 of 2025, updating the previous Federal Decree-Law No. 28 of 2022. These amendments will officially come into effect on January 1, 2026. The purpose behind the changes is simple: strengthen the tax framework, eliminate ambiguity, and provide clearer guidelines for both taxpayers and the Federal Tax Authority (FTA).
Clearer Refund Timelines
One of the most significant updates centers on tax credit balances—situations where a business has overpaid its taxes. The amended law now sets a clear five-year period from the end of the relevant tax period for businesses to request a refund or apply the credit to settle other tax obligations.
This is the first time the law has defined this timeframe with such precision.
The update also introduces flexibility. In specific cases outlined in the amendments, taxpayers may submit refund requests after the five-year window has expired, or within the final 90 days before the deadline, helping prevent valid claims from being rejected due to timing issues.
Expanded Audit Authority
The new rules also detail when the FTA can continue to review a taxpayer’s records. Under the amendment, the FTA may conduct an audit or issue a tax assessment even after the standard limitation period, but only in defined circumstances.
One example is when a business submits a refund request in the final year of the limitation period. This ensures the FTA can verify the claim while maintaining clarity around audit boundaries for all taxpayers.
Binding Directions for Consistency
A major enhancement is the FTA’s new power to issue binding directions. These directions apply to both taxpayers and the Authority when interpreting how tax laws apply to specific transactions.
This change aims to eliminate inconsistent treatment of similar cases, ensuring greater clarity, reduced uncertainty, and more predictable tax planning for businesses.
Relief Measures for Older Refund Claims
The amendments also include transitional rules for older refund claims. If a taxpayer’s five-year refund period has already expired before January 1, 2026, or is due to expire within the year after that date, they will receive a new one-year window starting January 1, 2026 to submit a refund request.
Additionally, if one of these older refund requests is submitted and the FTA has not yet issued a decision, the taxpayer will have two years from the date of filing to submit a Voluntary Disclosure to fix any previous errors related to the claim.
Applies to All UAE Federal Taxes
The Tax Procedures Law governs the administration of all federally managed taxes in the UAE, including:
- Corporate Tax (Federal Decree-Law No. 47 of 2022)
- Value Added Tax (VAT)
- Excise Tax
As a result, these amendments affect all businesses interacting with the FTA, regardless of the specific tax type.
What Taxpayers Gain
The updated law brings more structure, transparency, and predictability to the UAE’s tax landscape.
Key benefits include:
- A clear five-year refund window with defined exceptions
- Opportunities to correct older tax issues under specific conditions
- Greater consistency through binding directions issued by the FTA
At the same time, the FTA receives improved tools to protect public revenue and ensure uniform application of tax laws.
Overall, these changes aim to make the UAE’s tax environment more transparent, stable, and easier to navigate, while maintaining robust safeguards for public funds.
