UAE announces new VAT rules effective January 1, 2026

The UAE has issued new changes Value Added Tax (VAT) rules, introducing measures that tighten governance, streamline procedures and enhance compliance.

The revised rules—effective January 1, 2026—aim to improve administrative efficiency and keep the tax system aligned with international standards.

The Ministry of Finance has announced the issuance of Federal Decree-Law No. (16) of 2025, amending certain provisions of Federal Decree-Law No. (8) of 2017 on Value Added Tax. The amended law will take effect from January 1, 2026.

UAE VAT laws

According to the Ministry, the changes form part of the UAE’s ongoing efforts to develop its tax system and enhance regulatory and administrative efficiency.

The amendments aim to simplify tax procedures for taxpayers while ensuring transparency and compliance with international standards.

A key update relieves taxable persons from issuing self-invoices when applying the reverse charge mechanism. Instead, taxpayers must retain supporting documents related to supply transactions, as specified by the Executive Regulation.

This measure reduces procedural burdens, provides clearer audit evidence and supports more efficient administration.

The amendments also introduce a five-year time limit for submitting requests to reclaim any excess refundable tax after reconciliation has taken place.

Once this period has elapsed, the right to reclaim the tax expires. According to the Ministry, this prevents the build-up of old balances, strengthens financial certainty and promotes fairness among taxpayers, in line with international best practices governing refund processes.

UAE tax evasion

In a further step to combat tax evasion, the amendments authorise the Federal Tax Authority (FTA) to deny the deduction of input tax if it determines that a supply forms part of a tax-evasion arrangement.

Taxpayers must verify the legitimacy and integrity of supplies before deducting input tax, following the procedures and measures set out by the FTA.

This approach reinforces shared responsibility, strengthens governance across the supply chain and safeguards public revenue.

The Ministry of Finance emphasised that the new amendments support the UAE’s efforts to enhance its tax system, ensure a fair and transparent compliance environment, and promote both financial and administrative efficiency.

The measures, it said, also support the sustainability of public resources and bolster the competitiveness of the national economy.