Image Credit : WAM
The UAE Ministry of Finance has announced a series of changes to the country’s Value Added Tax framework, confirming the issuance of Federal Decree-Law No. (16) of 2025. The amendments, which modify key provisions of the original VAT law introduced in 2017, will take effect from January 1, 2026.
The update is part of the UAE’s broader strategy to modernise its tax system and streamline administrative procedures. One of the most notable changes is the removal of the requirement for taxable persons to issue self-invoices when using the reverse charge mechanism. Instead, businesses must maintain supporting documents for supply transactions in accordance with the Executive Regulation. The Ministry says this shift will ease procedural load, improve audit clarity, and support more efficient administration.
Another major introduction is a five-year deadline for taxpayers to submit requests to reclaim excess refundable tax after reconciliation. Any claims submitted after this period will no longer be valid. Authorities say the time limit helps prevent outdated balances from accumulating, improves financial certainty, and aligns the UAE’s processes with international best practices.
To further strengthen oversight and curb tax evasion, the amendments grant the Federal Tax Authority new powers to deny input tax deductions if a supply is found to be linked to a tax-evasion arrangement. Businesses will now be responsible for verifying the legitimacy of supplies before claiming input tax. According to the Ministry, this measure enhances governance across the supply chain and reinforces collective responsibility among taxpayers.
The Ministry of Finance highlighted that the reformed VAT rules are designed to support transparency, fairness, and efficiency across the tax ecosystem. By tightening compliance standards and simplifying procedures, the UAE aims to sustain public revenues while maintaining a competitive economic environment.
