UAE Tax Credit Refund Opportunities from 2026

A new tax procedural law in the United Arab Emirates will come into effect on January 1, 2026, allowing credit balances to be refunded from the Federal Tax Authority. The amendment aims to improve the transparency, fairness, and efficiency of the tax system, ensuring the protection of taxpayers' rights and financial accountability.

The new regulation is an important milestone in the UAE's tax system. Previously, there was no clear deadline or framework for refunding outstanding credit balances. However, taxpayers are now granted explicit eligibility to request refunds within a specified timeframe.

Who can request a refund?

According to the amendment, taxpayers with a credit balance expiring before or within one year of January 1, 2026, are eligible for a refund. The refund request must be submitted no later than January 1, 2027. This is especially important for those who accumulated unused credits between 2021 and 2025, as they now have the opportunity to reclaim these, provided they meet the legal criteria.

Additionally, taxpayers are allowed to make a voluntary declaration related to the refund request within two years if the Federal Tax Authority has not yet made a decision regarding the refund. This flexibility ensures that amounts rightly owed are not lost due to previous administrative oversights.

What is the future refund deadline?

The amendment introduces a general five-year deadline. This means that in the future, all taxpayers will have up to five years from the end of the relevant tax period to submit a refund request or use the balance for other tax liabilities. This provides a clear framework and aids in taxpayers' financial planning.

However, the law also includes certain exceptions. If the credit originates within the last 90 days of the five-year period, the claim can still be made even if the five-year deadline has technically passed. This rule ensures taxpayers are not disadvantaged by a narrowly interpreted deadline.

How do tax audits change?

The amendment also affects the rules concerning tax audits. The FTA will now have the right to conduct tax audits in certain cases even after the general statute of limitations has expired. This can particularly occur if a refund request is filed in the final year of the five-year period. This provision serves to protect state financial interests while maintaining taxpayer rights, as the process remains transparent and legally regulated.

New powers in the hands of the tax authority

The new law allows the FTA to issue binding statements on the interpretation of tax laws. This not only provides legal certainty for taxpayers but also binds the tax authority itself, reducing the chance of differing decisions in similar cases. This can significantly simplify tax practice and create a more predictable business environment in the UAE.

Why is this change important for businesses?

Expanding refund opportunities and clarifying deadlines is particularly important for businesses that regularly complete VAT returns or other types of tax obligations in the UAE. In sectors such as trade, logistics, consulting, or digital services, it is common for overpayments to occur periodically. These often got stuck in the FTA system, but now there is an opportunity for efficient reclamation.

Financial planning is becoming increasingly important, especially for companies operating in international markets. The new rules enhance the UAE's financial and business stability and send a positive signal to investors. In many countries, the slowness and opacity of tax refund systems pose serious issues— the UAE is moving in the opposite direction.

What should you do now?

Every concerned business and individual should already review if they have a credit balance in the FTA system and, if so, when the amount expires. With the 2026 deadlines in mind, they should prepare to submit applications and consult a tax advisor to determine the precise steps to take.

Failing to seize the new opportunities could mean losing a refund that one is rightfully entitled to. Thus, the change is not only technical but can also have direct financial implications.

Summary

The new tax refund regulations coming into effect in the UAE from 2026 provide taxpayers with greater flexibility and transparency than ever before. The precise deadline for refund requests, the ability for voluntary declaration, and the introduction of mandatory legal interpretation all aim to make the tax system fair, predictable, and digitally well-functioning. Those operating in Dubai or other emirates of the UAE should prepare in advance to not miss out on the opportunities available to them.