UAE Tax Overhaul 2026: What the Federal Tax Authority’s New Rules Mean for Your Business
Beginning 1 January 2026, the UAE will implement major amendments to the Tax Procedures Law, marking one of the most significant shifts in the country’s tax-compliance framework. These changes redefine how businesses manage refunds, credits, documentation, audits, and overall tax governance. For companies across the UAE — from SMEs to large multinational groups — these updates are more than procedural adjustments. They form a new foundation for risk management, transparency, and cash-flow optimisation. At TFAB, we guide businesses through evolving regulations with clarity and confidence. Here’s what the 2026 Tax Overhaul means for your organisation.
A Defined Five-Year Limit for Tax Refund and Credit Claims
One of the most notable updates is the introduction of a fixed five-year limitation period to request tax refunds or apply credit balances against outstanding liabilities.
What This Means for Your Business
- Your right to reclaim VAT or other federal tax credits expires five years after the relevant tax period.
- Unclaimed credits cannot be recovered once this window closes.
- Businesses must ensure internal systems accurately track refund deadlines.
This offers clarity and predictability — but increases the risk of losing eligible amounts due to delayed action.
Transitional Relief for Older Credit Balances
To ease the transition, the law grants a one-year window starting January 2026 for businesses to reclaim older VAT credits and historical balances.
Who Benefits?
Companies with:
- Old unrecovered VAT credit balances
- Soon-to-expire refund rights
- Historical overpayments
This is a strategic cash-flow opportunity that businesses should act on before timelines permanently close.
Expanded and Clarified FTA Audit Powers
While the standard audit limitation period remains five years, the FTA may review earlier periods in cases involving:
- Fraud or tax evasion
- Refund requests submitted near the end of the limitation period
Situations requiring deeper verification
Why This Matters
Businesses must be ready with:
- Clear and organised documentation
- Strong audit trails
- Accurate supply-chain and transaction records
This is especially critical for proving VAT recoverability and demonstrating compliance.
VAT Law Enhancements: Stricter Compliance Expectations
Amendments to the VAT Law introduce key operational changes.
Key Updates
- Input tax can only be recovered or refunded within five years.
- The FTA may deny VAT recovery if the taxpayer knew or should have known that a transaction was linked to evasion.
Some self-invoicing obligations may be eased, but supporting documentation remains required.
Impact
Businesses must strengthen:
- Supplier due-diligence processes
- Internal tax-control frameworks
- Documentation and evidence for VAT claims
What the 2026 Overhaul Means for Your Business
- More Predictability : Clear timelines allow for better tax planning and forecasting.
- Higher Compliance Standards : Businesses must adopt robust documentation and internal control systems.
- Opportunities to Recover Money : The 2026 transitional period offers one last chance to reclaim historic tax credits.
- Greater Audit Preparedness : Stronger FTA powers mean proactive compliance is no longer optional.
Your 2026 Tax Compliance Checklist
TFAB recommends taking the following steps before January 2026:
- Review All Tax Credit Balances
Identify recoverable VAT and federal credits from the past 5–7 years. - Submit Refund or Offset Requests Early
Avoid missing the new limitation deadlines. - Strengthen Documentation & Record-Keeping
Maintain invoices, contracts, supply-chain details, and audit-ready records. - Enhance Internal Tax Controls
Update ERP and accounting systems to automate compliance workflows. - Conduct a Pre-2026 Tax Health Check
Identify risks, gaps, and potential overpayments. - Monitor FTA Updates
New guidelines and clarifications are expected as implementation approaches.
Who Should Pay Special Attention?
SMEs: Often hold unrecovered VAT credits at risk of expiration.
Large Corporations: Complex supply chains increase documentation challenges.
Free-Zone Entities: While exempt from some corporate tax rules, they remain subject to VAT and procedural compliance.
Final Thoughts: Prepare Your Business Now
The UAE’s 2026 tax overhaul aims to create a more transparent, standardised, and efficient tax environment. While the rules impose stricter deadlines and heightened compliance expectations, they also offer valuable opportunities — particularly the final window to reclaim historical tax credits. Early preparation is essential.
At TFAB, we support businesses in:
- Reviewing historical tax filings
- Reclaiming eligible tax credits
- Strengthening compliance systems
- Ensuring audit readiness
- Navigating evolving FTA regulations
Book a consultation with TFAB today to prepare your business for the UAE’s 2026 tax landscape.