United Arab Emirates: New Federal Decree-Laws Amending the VAT Law and Tax Procedures Law

Article 3(1) to (3) – Scope of application (new additions)

Paragraph (1) adds that taxpayers with credit balances whose 5-year period expired before 1 January 2026 or will expire within 1 year from this date may request a refund or allocate the credit balance to outstanding liability.

Additionally, paragraph (2) states that a Voluntary Disclosure may be filed within two years of the refund request submitted in application of (1), if the FTA has not yet issued a decision on the refund application.

Lastly, paragraph (3) clarifies that the FTA may issue a tax audit or assessment notification in relation to a tax refund or credit allocation application even beyond the 5-year limitation period, provided the notification is issued within 2 years of the relevant request.

Note that Article 3 includes the following transitional provision. Specifically, “[a] Taxpayer who is entitled to a refund of a Tax or credit balance, where the period of (5) five years has lapsed from the end of the Tax Period referred to in Clause 2 of Article 38 of Federal Decree-Law No. 28 of 2022 referred to above, may submit to the Authority an application for a refund of this credit balance or utilize it in the payment of Tax liabilities or Administrative Penalties, provided that this request is submitted within a period not exceeding a year from the effective date of this Decree-Law [1 January 2026].”

Article 9(3) – Determination of Payable Tax

The amended Article provides that the FTA’s powers to set off credits or overpayments against any tax liability or outstanding penalties is limited to a 5-year period from the end of the relevant tax period.

Article 10(5) – Voluntary Disclosure

Article 10(5) is amended to remove the obligation to file Voluntary Disclosure (“VDs”) for nil-impact or minor errors affecting the relevant Tax Return. It follows that VDs will only be required only for cases that the FTA will specifies subsequently. Taxpayers will be able to correct nil-impact and minor errors directly through the relevant Tax Returns.

Article 38(3) to (6) – Application for Tax Refunds (new additions)

Under the amended Article, it is specified that refund requests for credit balances (including credit available due to overpaid tax, return and VDs credits…) must be filed within 5 years from the end of the relevant tax period. If not submitted in time, the right to refund will be permanently forfeited.

Additionally, if a credit arises from an FTA decision after the 5‑year window or in its last 90 days, the taxpayer has 1 year from the date the balance arose to file the refund. For other late or last‑90‑day credits, the taxpayer has 90 days to request a refund. Missing these windows would result in forfeiting the claim.

Article 46 (1), (4) and (6) – Statute of Limitation

The amended paragraph (1) confirms that the default 5-year limitation period for the FTA to conduct or issue a tax audit or assessment is retained, unless exceptional circumstances listed under paragraphs (4), (7) and (8) of the Article.

Paragraph (4) covers the scenario where a refund claim is filed in the fifth year, in which case the FTA gets an extra 2 years from the claim date to audit/assess that claim.

The amended clause 6 confirms the default 5-year limitation period for VDs.