UAE: The Ministry of Finance has issued Federal Decree-Law No. (16) of 2025, introducing amendments to Federal Decree-Law No. (8) of 2017 on Value Added Tax (VAT). These changes will take effect on January 1, 2026.

The updated regulations are part of the UAE’s continued efforts to modernize its tax framework and improve administrative and regulatory efficiency. The amendments aim to simplify procedures for taxpayers while maintaining transparency and alignment with international standards.

One key change is that taxable persons will no longer be required to issue self-invoices when applying the reverse charge mechanism. Instead, they must keep all supporting documents for supply transactions, as outlined in the Executive Regulation. This adjustment reduces procedural burdens, enhances administrative efficiency, and ensures clear documentation for audit purposes.

Additionally, the amendments introduce a five-year deadline for submitting claims to recover excess refundable tax after reconciliation. After this period lapses, the right to reclaim the tax expires. This measure helps prevent the accumulation of outdated balances, improves financial certainty, and promotes fairness—reflecting international best practices for handling tax refunds and reviewing outstanding amounts.

To further strengthen efforts against tax evasion, the Federal Tax Authority (FTA) is now empowered to deny the deduction of input tax if it determines that a supply is part of a tax-evasion scheme. Taxpayers must verify the validity and integrity of supplies before claiming input tax deductions, following FTA procedures. This approach enhances shared responsibility, reinforces governance across the supply chain, and protects public funds.

The Ministry of Finance noted that these reforms support the UAE’s broader mission to improve the tax system, ensure a fair and transparent compliance environment, and promote both administrative and financial efficiency. The measures also contribute to sustainable public finances and strengthen the competitiveness of the national economy.