UAE VAT Law Amendments 2026: What Every Business Must Know

The UAE has introduced sweeping amendments to its VAT framework through Federal Decree-Law No. 16 of 2025, effective 1 January 2026. These represent the most consequential VAT changes since the tax was introduced in 2018.

Key changes include: the removal of self-invoicing requirements under the Reverse Charge Mechanism; a strict five-year time limit on claiming excess refundable VAT; and new FTA powers to deny input VAT recovery where transactions are linked to tax evasion.

Businesses must immediately review historic VAT credit balances — especially those originating in 2021, which will begin to lapse during 2026. Any unclaimed credits beyond the five-year window will be permanently forfeited.

The amendments also introduce a "know-your-supplier" compliance duty, requiring businesses to conduct due diligence on vendor legitimacy before claiming input tax deductions.

SAE recommends: auditing all VAT credit balances by originating period, submitting outstanding refund claims before 31 December 2026, and reinforcing internal supplier verification controls.