Transforming Tax Compliance

The UAE has introduced significant amendments to the Tax Procedures Law (Federal Decree-Law No. 28 of 2022) through updates issued in Issued 1 Oct 2025 (Effective 1 Jan 2026). These revisions introduce new compliance obligations, redefine statutory timelines, and enhance the Federal Tax Authority’s (FTA) administrative powers. The consolidated version published by the Ministry of Finance reflects these updates.

Together, these developments represent a shift toward greater digitalisation, enhanced taxpayer discipline, and more structured dispute management. Organisations operating in the UAE regardless of size or sector should familiarise themselves with the updated provisions to ensure continued compliance.

Together, these developments represent a shift toward greater digitalisation, enhanced taxpayer discipline, and more structured dispute management. Organisations operating in the UAE regardless of size or sector should familiarise themselves with the updated provisions to ensure continued compliance.

1. Introduction of the Electronic Invoicing System

A defining feature of the amendments is the introduction of Article 4(bis), establishing the UAE’s Electronic Invoicing System. This article grants the Minister of Finance the authority to determine:

• which persons will be subject to the system,
• the technical requirements governing electronic invoice issuance, transmission, and storage, and
• the effective dates for implementation.

This represents a structural shift toward end-to-end digital tax administration. Businesses will need to ensure that invoicing platforms can generate compliant electronic invoices, maintain secure digital audit trails, and interface with the Authority’s infrastructure once technical specifications are published.

2. A New, Time-Bound Framework for Refunds and Credit Balances

The amendment to Article 38 introduces clear and strict rules for refund claims. Key changes include:

• A mandatory five-year deadline to submit refund applications from the end of the relevant Tax Period;
• Defined categories determining how refund timelines apply depending on whether the balance arose from excess payment, assessment, voluntary disclosure, or other events.
• A lapse of refund entitlement if deadlines are not met.
• A transitional window triggered by the effective date of the 2025 amendments.

This new framework makes timely reconciliation essential. Businesses should conduct regular reviews of their tax ledgers and ensure that credit balances are either utilised promptly or refunded within the statutory timeframe to avoid forfeiture.

3. Expanded and Detailed Statute of Limitation Provisions

Amendments to Article 46 refine the statute of limitation rules governing the FTA’s ability to conduct audits or issue tax assessments. While the general five-year limit from the end of the relevant Tax Period remains intact, several additional rules now apply:

• If the FTA has notified the taxpayer of a tax audit before the expiry of the five-year window, the Authority may complete the audit or issue an assessment within four years from the date of notification.
• If a taxpayer submits a Voluntary Disclosure during the fifth year, the Authority may issue assessments within one year from the date of submission.
• Where a refund application or credit balance arises toward the end of a limitation period, the Authority may issue an assessment within two years from the date the refund application is submitted.
• Transitional clauses apply to claims submitted after the amendments take effect.

Collectively, these changes underscore the importance of accurate documentation, secure record-keeping, and clear internal controls around submission dates.

4. Authority to Issue Binding Administrative Directives

A new Article 54(bis) authorises the FTA to issue binding directives for the interpretation and application of the Tax Procedures Law and underlying tax laws. These directives once issued will have binding effect on both the Authority and the taxpayer.

This development enhances legal certainty while ensuring consistent application of tax rules. It also signals that more granular operational guidance may be introduced, particularly in emerging areas such as electronic invoicing and digital compliance.

5. Strengthened Clarity in Administrative and Dispute Procedures

The amendments also refine various procedural rules, including:

• Allocation of credit balances (Article 9), which now incorporates a clearer five-year allocation window.
• The finality of decisions issued by the Tax Disputes Resolution Committee (Articles 33 and 34), particularly for disputes involving amounts not exceeding AED 100,000;
• Enhanced clarity around notification, audit procedures, and obligations of legal representatives.

These refinements support improved transparency, certainty and efficiency within the UAE’s tax administration environment.

What Businesses Should Do Now

Given the scale and nature of these amendments, organisations should take proactive measures to align their systems, processes and documentation practices with the new requirements: