Abu dhabi: The Ministry of Finance has announced the issuance of Federal Decree-Law No. (16) of 2025 amending certain provisions of Federal Decree-Law No. (8) of 2017 on Value Added Tax, which will enter into force as of January 1, 2026. The move aims to develop the UAE's tax system and enhance administrative and regulatory efficiency.
According to Emirates News Agency, the amendments aim to simplify tax procedures for taxpayers while ensuring transparency and compliance 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 retain supporting documents related to supply transactions, as specified by the Executive Regulation. This change is intended to enhance administrative efficiency and provide clear audit evidence while reducing procedural burdens.
Additionally, the amendments introduce a five-year time limit for submitting requests to reclaim any excess refundable tax after reconciliation. This measure is designed to prevent the accumulation of old balances, strengthen financial certainty, and promote fairness among taxpayers, aligning with international best practices for regulating refund processes and reviewing balances.
To combat tax evasion, the amendments authorize the Federal Tax Authority (FTA) to deny the deduction of input tax if it determines that the supply forms part of a tax-evasion arrangement. Taxpayers are required to verify the legitimacy and integrity of supplies before deducting input tax, in accordance with procedures and measures set by the FTA. This approach is aimed at reinforcing shared responsibility, strengthening governance across the supply chain, and safeguarding public revenue.
The Ministry of Finance emphasized that these amendments are part of the UAE's ongoing efforts to enhance the tax system, ensure a fair and transparent compliance environment, and promote both financial and administrative efficiency. These measures further support the sustainability of public resources and bolster the competitiveness of the national economy.