The UAE Ministry of Finance has issued Federal Decree-Law No. (16) of 2025, introducing amendments to the Value Added Tax (VAT) Law No. (8) of 2017. The updated law, which takes effect on January 1, 2026, aims to strengthen the UAE’s tax framework and streamline administrative procedures.

According to the Ministry, the changes are designed to simplify processes for taxpayers while reinforcing transparency and alignment with international standards.

One of the key updates removes the requirement for taxable persons to issue self-invoices when applying the reverse charge mechanism. Instead, they must retain supporting documents related to supply transactions as outlined in the Executive Regulation. The Ministry stated that the revision will enhance administrative efficiency, provide clearer audit evidence, and reduce procedural burdens.

The amendments also introduce a five-year limit for submitting requests to reclaim excess refundable tax after reconciliation. Once this period lapses, the right to reclaim expires. The Ministry stated that this measure helps prevent the accumulation of outdated balances, enhances financial certainty, and promotes fairness among taxpayers, aligning with global best practices.

Additionally, the new provisions authorize the Federal Tax Authority (FTA) to deny input tax deductions if it determines that a supply is linked to a tax evasion arrangement. Taxpayers are therefore required to verify the legitimacy and integrity of supplies before claiming input tax, following the procedures outlined by the FTA.

The Ministry said these amendments support ongoing efforts to enhance the UAE’s tax system, strengthen compliance and transparency, and promote financial and administrative efficiency. The updates are also intended to support the sustainability of public resources and reinforce the competitiveness of the national economy.