Ministry of Finance Announces Important Changes to Improve Transparency and Efficiency.
The UAE Ministry of Finance (MOF) has officially announced new VAT rules that will come into effect from January 1, 2026. The update was confirmed on December 3, 2025 through the Ministry’s official website and social media channels.
These changes come under Federal Decree-Law No. (16) of 2025, which amends several parts of Federal Decree-Law No. (8) of 2017 on Value Added Tax. The goal is to improve the country’s tax system and make procedures simpler and more transparent for businesses and taxpayers.
Why the New VAT Amendments Were Introduced?
According to the Ministry of Finance, the updated rules are part of the UAE’s continuous efforts to:
- Develop a modern and efficient tax system
- Increase administrative transparency
- Strengthen compliance with international standards
- Reduce unnecessary paperwork for businesses
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Key Changes Under the New VAT Rules
1. No More Self-Invoices Under Reverse Charge Mechanism
One of the major changes is that taxable persons will no longer be required to issue self-invoices when using the reverse charge mechanism.
Instead, they only need to keep proper supporting documents as per the Executive Regulation.
This reduces procedural work and still provides clear documentation for audits.
2. Five-Year Time Limit for Tax Refund Requests
Another important change is the introduction of a five-year deadline to submit requests for reclaiming excess refundable tax after reconciliation.
Once this five-year period ends, the right to claim the refund expires.
This rule helps:
- Prevent long-standing, unsettled balances
- Provide financial certainty
- Improve fairness for all taxpayers
- Align the UAE with global best practices
Strengthening Tax Governance and Combating Evasion
The amendments also give the Federal Tax Authority (FTA) stronger powers to ensure compliance.
3. FTA Can Deny Input Tax Deduction in Cases of Tax Evasion
The FTA may deny input tax deduction if it finds that a supply is linked to any tax-evasion arrangement.
This means businesses must take more responsibility to:
- Verify the legitimacy of suppliers
- Ensure that transactions are genuine
- Follow FTA’s procedures for safe and compliant tax deductions
This step is designed to protect public funds and ensure a clean and transparent supply chain across the country.
UAE’s Commitment to a Strong and Fair Tax System
The Ministry of Finance explained that these VAT amendments reflect the UAE’s continued commitment to:
- Strengthening the tax framework
- Ensuring fairness and transparency
- Supporting efficient business processes
- Promoting sustainable public resources
- Enhancing the UAE’s economic competitiveness
The updated rules aim to make VAT procedures easier for businesses while improving overall governance to build a stronger, more secure financial system.
