UAE’s New Tax Procedures Law
January 4, 2026
Amendments include five‑year refund deadline and expanded FTA powers
Introduction
On 1 January 2026, the United Arab Emirates formally implemented major amendments to its Tax Procedures Law (Federal Decree‑Law No. 17 of 2025) and the VAT Law (Federal Decree‑Law No. 16 of 2025).
These reforms alter key aspects of how taxes are administered, moving the UAE’s procedural framework closer to international standards while strengthening compliance certainty for taxpayers.
Central to the reforms is the introduction of a five‑year statutory limitation period for claiming VAT refunds and credit balances, a first for the UAE, alongside amplified audit powers for the Federal Tax Authority (FTA), extended assessment windows, and clarified procedural rights and obligations for businesses.
What Has Changed?
The Five‑Year Refund Deadline
Historically, UAE businesses could hold excess input VAT credits indefinitely, carrying forward balances until they chose to claim refunds or offset future liabilities. Under the revised law:
Taxpayers must submit refund requests or utilise excess credit balances within five years of the end of the relevant tax period. After this deadline, credits expire and cannot be claimed.
A transitional relief period applies to legacy credits that would otherwise expire at the start of 2026: taxpayers have until 31 December 2026 to claim credits already older than five years.
This deadline applies not only to VAT but also to credit balances arising under corporate tax and excise tax when applicable. It requires systematic internal tracking of tax credit ledger balances by period.
Expanded Audit and Assessment Powers
The amendments significantly expand the FTA’s procedural authority:
The standard audit limitation period remains five years, but in specific risk scenarios — particularly suspected fraud or evasion — the FTA can conduct audits or issue assessments up to 15 years after the end of the relevant tax period.
The authority to issue binding tax interpretations and directives means consistent application of law across taxpayers and FTA officers, reducing interpretive uncertainty.
Refund claims submitted within the five‑year window can trigger extended audit exposure for prior years, effectively reopening historical periods.
Combined, these changes elevate the importance of robust documentation routines and proactive tax governance.
Anti‑Evasion and Compliance
Parallel amendments to the VAT Law empower the FTA to deny input VAT recovery where the supply chain involves transactions tied to tax evasion anywhere in the chain, placing greater onus on taxpayers to perform supplier due diligence ahead of claiming recoveries.
Practical Impacts on UAE Businesses
From a technical planning perspective, several implications emerge:
- Cash‑flow and working capital: The five‑year refund deadline transforms input VAT credits from an indefinite asset into a time‑constrained one. Companies must now forecast refund windows as part of working capital planning.
- Compliance systems: Entities with long‑standing credit balances from capital‑intensive activities (e.g., real estate or export‑oriented sectors) must prioritise older periods before they expire.
- Audit readiness: With extended audit reach, maintaining contemporaneous records for at least the last 15 years in high‑risk scenarios becomes essential.
Conclusion
The UAE’s 2026 tax procedural amendments are not superficial paperwork changes. Instead, they reshape tax administration by introducing hard deadlines and enforcement mechanisms familiar in mature tax systems.
While the corporate tax rate remains unchanged, the procedural environment now demands far greater rigour.
Final thoughts
For many companies, proactive tax governance will be the difference between a smooth compliance experience and costly retroactive disputes. Early engagement with the new rules will unlock certainty and minimise unexpected financial impact.
CALL TO ACTION
Carry out a VAT credit ageing analysis immediately, prioritise refund or offset claims approaching the five‑year limit, and strengthen supplier due‑diligence processes to support future input VAT recoveries.
Do get in touch
if you have any queries about this article or any tax matters in the UK or UAE.
Navigating the UAE Employment Visa Process in 2026 Relocating to the United Arab Emirates for employment offers significant professional and financial opportunities. However, the UAE employment visa process is structured, compliance-driven and time sensitive. Understanding each stage in advance avoids unnecessary delays and protects both employer and employee from regulatory issues. Below is a comprehensive, easy-to-follow guide to the UAE employment visa process as it stands in 2026. Step 1: Securing a Confirmed Job Offer The UAE employment visa process begins with a formal job offer from a UAE-licensed entity. Only an employer registered with the relevant mainland authority or free zone authority can sponsor an employee. The employer becomes the visa sponsor and assumes legal responsibility for: Applying for the work permit Processing the residence visa Ensuring compliance with UAE labour law Covering government application fees (in most cases) Employees cannot independently apply for a standard employment visa without sponsorship. Step 2: Work Permit Application (Entry Permit Approval) Once the employment contract is signed, the employer applies for a work permit (also known as a labour approval) through the Ministry of Human Resources and Emiratisation (MOHRE) or the relevant free zone authority. Documents typically required include: Passport copy (valid for at least six months) Passport-size photographs Signed employment contract Attested educational certificates (if required for the role) If the employee is outside the UAE, an entry permit is issued, allowing them to enter the country legally for employment purposes. If the employee is already inside the UAE on a visit visa, status adjustment procedures apply. Step 3: Entry to the UAE (If Applying From Abroad) For applicants outside the UAE, the entry permit allows legal entry into the country. Once inside the UAE, the individual must complete the residency formalities within the validity period of the entry permit (usually 60 days). Timing is critical at this stage. Failure to complete the process within the permitted window may result in fines. Step 4: Medical Fitness Test All employment visa applicants must undergo a mandatory medical examination at an approved UAE medical centre. The test typically screens for: HIV Tuberculosis Hepatitis (in certain categories) The medical fitness certificate is a mandatory component of the residence visa application. Processing time: usually 24–72 hours depending on service speed selected. Step 5: Emirates ID Biometrics The applicant must apply for an Emirates ID, which serves as the UAE’s official identification card. This process includes: Biometric data capture (fingerprints and photograph) Identity verification The Emirates ID is linked directly to the residence visa and is essential for: Opening bank accounts Renting property Obtaining a driving licence Accessing utilities and telecom services Step 6: Residence Visa Stamping Following medical clearance and Emirates ID application, the residence visa is issued and stamped electronically against the passport record. Employment residence visas are typically valid for: 2 years (mainland companies) 2–3 years (depending on free zone authority) Once issued, the employee is legally resident in the UAE and may sponsor eligible dependants (subject to salary thresholds). Key Considerations in 2026 1. Free Zone vs Mainland Sponsorship Visa procedures differ slightly between mainland entities and free zone authorities. Free zones operate under independent regulatory frameworks, although federal immigration approval remains central. The choice between mainland and free zone employment has broader implications, including: Corporate structuring Tax residency status Social security considerations Family sponsorship options These should be assessed before finalising relocation plans. 2. Employment Visa vs Other UAE Visa Categories The UAE also offers: Green Visas (for skilled professionals and freelancers) Golden Visas (long-term residence for investors and high earners) Investor/Partner Visas For entrepreneurs and senior executives, an employment visa is not always the optimal route. Strategic structuring may offer longer validity and greater flexibility. 3. Tax Residency Implications The UAE does not levy personal income tax. However, relocating professionals must consider: Exit tax implications in their home country UK Statutory Residence Test (for British nationals) Split-year treatment Ongoing ties and centre-of-vital-interests rules Corporate tax exposure for business owners Inadequate pre-departure planning can result in unintended dual tax exposure. 4. Corporate Tax and Employment Structuring With the introduction of UAE Corporate Tax, business owners relocating to the UAE must assess: Whether they will remain directors of overseas entities Permanent establishment risks Substance requirements Intercompany arrangements Employment structuring must align with the broader corporate and tax strategy. Why a Structured Relocation Approach Matters Many professionals treat the employment visa as a simple administrative formality. In practice, it forms part of a much larger relocation framework that includes: Tax residency planning Wealth structuring Asset protection Banking arrangements Property acquisition Family visa coordination A piecemeal approach often creates long-term complications. How Mosaic Chambers Group Supports Your Move to the UAE At Mosaic Chambers Group, we provide integrated advisory services for internationally mobile individuals and entrepreneurs. We coordinate: Pre-departure UK tax planning UAE tax structuring advice Cross-border compliance Local regulatory compliance We work alongside trusted UAE-based partners to manage: Visa processing Company formation Corporate structuring analysis Family sponsorship applications Wealth protection strategies Relocating to the UAE should be strategic, compliant and financially efficient - not reactive. Speak to Our Advisory Team If you are considering accepting a UAE job offer or relocating your business operations to the Emirates, we recommend obtaining professional tax and structuring advice before finalising your move. Early planning protects your position, reduces risk and ensures your move to the UAE is commercially sound and fully compliant. Get in touch with our team today to begin your relocation strategy with clarity and confidence.
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