The Ministry of Finance has announced major amendments to the VAT regulations in the UAE 2026. These changes were brought about by Federal Decree-Law No. 16 of 2025, which amended Federal Decree-Law No. 8 of 2017 on VAT. The MoF has also amended the Tax Procedures Law by issuing Federal Decree-Law No. 17 of 2025, which amends certain provisions of Federal Decree-Law No. 28 of 2022. These latest developments took effect on January 1st 2026. The latest amendments to the UAE VAT Law on e-invoicing have been introduced to ensure the UAE’s objectives of achieving compliance, improving interaction with the FTA, and increasing transparency are met.
The amended VAT regulations in the UAE in 2026 are as follows. Every business operating in the UAE should be aware of these VAT-related changes as they form a core part of the future rollout of e-invoicing regulations.
Article 48, Clause 1 – Reverse Charge
Taxpayers are no longer required to issue self-tax invoices when importing goods or services required for their business. This has brought about a much-needed change that will lead to higher compliance and greater ease of doing business. It will eliminate the need to issue self-invoices, a tedious extra step, thereby improving administrative efficiency. Businesses are required to store supporting documents related to all their supply transactions. This amendment will ensure simpler auditing in the future.
Article 74, Clause 3 – Excess Recoverable Tax
The amended VAT regulation changes UAE 2026 include information on the VAT return balance (also called the excess recoverable tax). It states that businesses can carry forward the balance for up to 5 years, starting at the end of the tax period. Businesses must either submit a refund request or utilise the amount to offset VAT liabilities. Businesses must ensure this is done within five years of reconciliation.
If the business does not utilise the claim within the stipulated time, it will lose the right to claim, and the claim will automatically expire. This stipulation will bar the taxpayer from using the excess recoverable tax to obtain a refund or to offset VAT liabilities. Businesses must continually review and assess to ensure all excess recoverable input tax is claimed or used to prevent recoverable VAT loss.
The five-year time frame ensures businesses do not have a heap of old balances piling up. This helps businesses have sufficient time to claim their excess recoverable tax, thereby simplifying tax procedures. It also improves businesses' financial performance and aligns with regulations in other major parts of the world. Another benefit is that all taxpayers will be treated equally.
Additions to Article 54 - Recoverable Input Tax
The latest amendments to the UAE VAT law on e-invoicing include additional provisions to Article 54, as follows.
- If the tax authority finds that the supply is linked to tax evasion and the taxpayer was aware of the fact when claiming an input tax deduction, it will reject the claim instantly.
- The tax authority may reject input tax deductions if it finds that the taxpayer should have been aware of the tax evasion based on the supply situation.
- If the taxpayer does not verify, validate, or check the integrity of the received supplies but nonetheless claims the input tax, the authority will assume the taxpayer is aware of the tax evasion.
These additions are important improvements to the UAE VAT Law because they strengthen governance. They also imbibe the culture of shared responsibility and securing the revenue for the betterment of the economy. Tax evasion has been a serious issue. By adding these to the article, the FTA ensures that tax evasion is a practice of the past, with consequences if any party is found guilty.
Article 79 (Bis) – Statute of Limitations
This article has been removed, and any provisions that do not align with the UAE VAT law are considered invalid or inapplicable as of this point forward, per the Ministry of Finance.
The amendments to the VAT Law have been introduced to accommodate e-invoicing, which is expected to change the business landscape in the UAE. By amending these provisions, the UAE has ensured its readiness to adapt to changing times and its focus on a digitised economy. The UAE can better focus on improving governance and enforcing stringent rules against tax evaders through the new e-invoicing system and the amended VAT Laws. By ensuring the VAT Law takes effect months before the official roll-out of the phased implementation directive, the UAE is on the right track to improve businesses' understanding of the new changes.
