UAE VAT Update — What Businesses Should Know for 2026

The UAE Ministry of Finance will implement important amendments to the VAT law from 1 January 2026.

Key Changes

• Taxable persons using the reverse-charge mechanism will no longer be required to issue self-invoices. Instead, businesses must retain supporting documentation for supply transactions.
• There is now a five-year time limit for requesting refunds or claiming excess refundable VAT after reconciliation — after that, unclaimed amounts will expire.
• In a move to strengthen tax governance, the updated law authorizes the Federal Tax Authority (FTA) to deny input-tax deductions if the supply is part of a tax-evasion arrangement. Taxpayers must ensure the legitimacy of supplies before claiming input VAT.

What This Means for Your Business

At Avanor Consulting, we recognize what this means for businesses operating in or supplying to the UAE:

• Review any historical VAT credit balances — unclaimed refundable amounts beyond five years may be lost.
• Update internal accounting and compliance processes to reflect the reverse-charge invoice changes and enhanced documentation requirements.
• Conduct or strengthen supplier due diligence to avoid risks tied to disallowed input-tax deductions.