Listen to this article in summarized format
Loading...
××
Subscribe to
Unlock AI Briefing and Premium Content
Subscribe NowWhat's Included
- Exclusive Stories
- Daily ePaper Access
- Smart Market Tools
- Curated Investment Ideas
- Ad-lite Experience
Subscription
The UAE’s Ministry of Finance has announced updates to the country’s VAT law, effective from January 1, 2026. According to a Gulf News report, the new rules aim to simplify tax procedures, improve transparency, and align the UAE’s system with international standards.
“The move comes as part of the UAE’s ongoing efforts to develop its tax system and enhance administrative and regulatory efficiency. The amendments aim to simplify tax procedures for taxpayers while ensuring transparency and compliance with international standards,” the Ministry said in a statement.
Simpler VAT Filing
One major change removes the need for businesses to issue self-invoices under the reverse charge mechanism. Instead, businesses will maintain regular supporting documents, such as invoices or contracts.
(Join our ETNRI WhatsApp channel for all the latest updates)
“The amendments stipulate that taxable persons are relieved from issuing self-invoices when applying the reverse charge mechanism, while requiring them to retain supporting documents related to supply transactions, as specified by the Executive Regulation. This not only enhances administrative efficiency but also provides clear audit evidence and reduces procedural burdens,” the Ministry added.
As per the Gulf News report, another key update introduces a five-year deadline for claiming refundable VAT after accounts are reconciled. Claims after this period will no longer be accepted, providing businesses with certainty and preventing old claims from accumulating.
Stricter tax compliance
To prevent abuse, the Federal Tax Authority can deny input-tax deductions for transactions linked to tax-evasion schemes. Businesses are required to verify the legitimacy of supplies before claiming input VAT.
“Taxpayers are required to verify the legitimacy and integrity of supplies before deducting input tax, in line with the procedures and measures set out by the FTA. This approach reinforces shared responsibility, strengthens governance across the supply chain, and safeguards public revenue,” the Ministry said.
The Ministry highlighted that the changes will improve fairness among taxpayers, strengthen transparency, and support efficient public revenue management. The reforms also aim to maintain the UAE’s competitive business environment and ensure the long-term sustainability of the economy.
“The move comes as part of the UAE’s ongoing efforts to develop its tax system and enhance administrative and regulatory efficiency. The amendments aim to simplify tax procedures for taxpayers while ensuring transparency and compliance with international standards,” the Ministry said in a statement.
Simpler VAT Filing
One major change removes the need for businesses to issue self-invoices under the reverse charge mechanism. Instead, businesses will maintain regular supporting documents, such as invoices or contracts.
(Join our ETNRI WhatsApp channel for all the latest updates)
“The amendments stipulate that taxable persons are relieved from issuing self-invoices when applying the reverse charge mechanism, while requiring them to retain supporting documents related to supply transactions, as specified by the Executive Regulation. This not only enhances administrative efficiency but also provides clear audit evidence and reduces procedural burdens,” the Ministry added.
As per the Gulf News report, another key update introduces a five-year deadline for claiming refundable VAT after accounts are reconciled. Claims after this period will no longer be accepted, providing businesses with certainty and preventing old claims from accumulating.
Stricter tax compliance
To prevent abuse, the Federal Tax Authority can deny input-tax deductions for transactions linked to tax-evasion schemes. Businesses are required to verify the legitimacy of supplies before claiming input VAT.
“Taxpayers are required to verify the legitimacy and integrity of supplies before deducting input tax, in line with the procedures and measures set out by the FTA. This approach reinforces shared responsibility, strengthens governance across the supply chain, and safeguards public revenue,” the Ministry said.
The Ministry highlighted that the changes will improve fairness among taxpayers, strengthen transparency, and support efficient public revenue management. The reforms also aim to maintain the UAE’s competitive business environment and ensure the long-term sustainability of the economy.
