VAT Law Amendments in the UAE
Amendments to UAE Federal Decree-Law No. 8 of 2017 on Value-Added Tax were made effective as of January 1, 2026.
The applied changes are related to:
Simplified Reverse Charge Compliance
- The requirement to issue a self-invoice under the reverse charge mechanism is removed.
- Instead of self-invoices, businesses must keep proper supporting documentation (e.g., supplier invoices, contracts) to demonstrate the transaction.
- This simplifies administrative burden for transactions where the buyer accounts for VAT.
Five-Year Deadline for VAT Refunds & Credits
- Excess VAT credit balances or refund entitlements must be claimed within five years from the end of the tax period in which they arose.
- Unclaimed VAT credits after this period will expire.
- This applies across VAT refund claims and settling liabilities with credit balances.
Stronger Anti-Evasion and Compliance Powers
- The Federal Tax Authority (FTA) can deny input tax recovery where transactions are linked to evasion or insufficient due diligence.
- Taxpayers must demonstrate legitimate business dealings and documentation to safeguard input VAT claims.
Documentation & Record Keeping
- Even though self-invoicing is no longer required for reverse charge, businesses must still retain complete documentation supporting VAT treatments, especially for international or reverse charge situations.
- Better documentation supports audit readiness and compliance checks.
Broader Tax Procedure Changes Supporting VAT Rules in UAE
Although separate from the VAT law itself, amendments to the Tax Procedures Law (Federal Decree-Law No. 17 of 2025) also interact with VAT compliance:
Refund & Audit Timeframes
- A fixed five-year limitation period is established for seeking VAT refunds and applying tax credit balances.
- The FTA’s ability to audit or issue assessments after the five-year period has also been updated in specific cases.
The changes didn’t affect the VAT rate. VAT rate remains at 5%. Core taxable supplies and standard VAT principles still apply.
To understand how these UAE VAT changes will affect your business and to ensure full compliance in 2026, contact the tax and finance experts at Smart Advisors Group for tailored guidance and practical support.
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