Quick Answer
UAE VAT law has been amended twice in recent cycles: Cabinet Decision No. 100 of 2024 rewrote large parts of the Executive Regulation (composite supplies, export evidence, invoice timelines, registration rules), and Federal Decree-Law No. 16 of 2025 amended the VAT Decree-Law itself, removing the self-invoicing requirement on imports, letting the FTA deny input tax linked to supply-chain tax evasion, and capping how long excess recoverable VAT can be carried forward at five years. All of these are now the standing rules, not pending changes.
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Two Instruments, Two Layers of the Law
VAT amendments come in at two different levels, and it matters which one a given change sits in. Cabinet Decision No. 100 of 2024 amended the Executive Regulation, the detailed operating rules under the main law. Federal Decree-Law No. 16 of 2025 amended the VAT Decree-Law (Federal Decree-Law No. 8 of 2017) itself, the primary legislation. The Decree-Law changes carry more weight and are harder to reverse; the Executive Regulation changes are more numerous and more operational.
Executive Regulation Changes (Cabinet Decision No. 100 of 2024, effective 15 November 2024)
| Area | What changed |
|---|---|
| Composite supply test (Article 4) | A single composite supply now requires all components to come from the same supplier and be priced as one invoice line, not invoiced separately. |
| Export evidence (Article 30) | Acceptable proof for zero-rated exports widened to include customs declarations, shipping certificates, or evidence from UAE or destination-country authorities; the definition of “agent” now covers overseas agents who secure that documentation. |
| Zero-rated services (Article 31) | Services subject to special place-of-supply rules, real estate, transportation, telecoms and electronic services, hotel and catering, and work performed on goods, are excluded from zero-rating even when exported. |
| International transport (Article 33) | A local transport leg is zero-rated only when the same provider also supplies the international leg it connects to. |
| Employee health insurance (Article 53) | Input VAT on health insurance for employees and up to one spouse and three children is now recoverable where the coverage is legally mandated under UAE labour law, or provided in a Designated Zone. |
| Registration and deregistration (Articles 8, 14, 14 bis) | Voluntary registration now requires evidence of intent to make taxable or zero-rated supplies; the FTA gained discretionary power to deregister a business, effective immediately rather than only at a tax period end. |
| Invoicing and credit notes (Articles 59-60) | Summary tax invoices must be issued within 14 days of month-end; each credit note in a chain must reference the adjusted value from the one before it. |
| Intergovernmental transfers (Article 3 bis) | Transfers of real estate or similar projects between government entities are not treated as a taxable supply. |
The exemptions this same Cabinet Decision introduced for financial services, fund management, and virtual asset transfers are covered in depth in our guide to current UAE VAT exemption categories, rather than repeated here.
VAT Decree-Law Changes (Federal Decree-Law No. 16 of 2025, effective 1 January 2026)
This round of amendments went further, changing the primary law rather than just its operating rules.
- Self-invoicing on imports removed (Article 48). A taxable person importing goods or services under the reverse charge mechanism still has to account for the VAT due, but no longer has to issue a tax invoice to itself to do it. The tax obligation stays; the paperwork step it used to require goes away.
- Input tax can now be denied over supply-chain evasion (new Article 54 bis). The FTA can reject an input tax claim where the transaction sits in a supply chain connected to tax evasion, and the claimant either knew or reasonably should have known. This puts a due-diligence burden on the recipient of a supply, not just the supplier committing the evasion.
- Excess recoverable VAT now expires after five years (Article 74). Where input tax exceeds output tax in a period, the excess used to carry forward indefinitely. It now has to be used, or a refund requested, within five years of the end of the tax period in which it arose, or it lapses for good.
- Standalone VAT statute of limitations repealed (former Article 79 bis). Limitation periods for VAT now run under the general Tax Procedures Law rather than a separate rule inside the VAT Decree-Law itself.
Worked Example: The Five-Year Excess Credit Rule
A UAE trading company’s Q2 2022 VAT return showed AED 180,000 of input tax against AED 140,000 of output tax, an excess of AED 40,000. Under the old rule, that excess simply carried forward, quarter after quarter, until it was used or refunded.
| Milestone | Date | Status |
|---|---|---|
| Excess VAT arises (Q2 2022 tax period ends) | 30 June 2022 | AED 40,000 excess recorded |
| Five-year window under Article 74 | Runs to 30 June 2027 | Must be used or a refund requested by this date |
| If unused past the deadline | After 30 June 2027 | Credit lapses permanently, no further offset or refund |
The rule is not retroactive punishment; older excess balances get the same five-year clock measured from when they originally arose. Businesses sitting on a long-standing VAT credit balance should check how old it is now, not wait until a refund is needed to find out it has already expired.
Frequently Asked Questions
Do businesses still need to self-invoice on imports under the reverse charge mechanism?
No, not since 1 January 2026. The tax still has to be accounted for and paid, but Federal Decree-Law No. 16 of 2025 removed the requirement to issue a self-invoice for it.
Can input tax be denied even if a business paid its supplier correctly and in good faith?
Yes, if the FTA determines the business reasonably should have known the supply chain was connected to tax evasion, even without direct knowledge. This is why supplier due diligence has become a more active compliance requirement, not just a paperwork formality.
What happens to VAT credit balances that were already old when the five-year rule took effect?
They are not automatically wiped out, but the five-year window is measured from when the excess originally arose, not from the date the rule was introduced. A balance that had already been sitting for several years could be close to, or past, its window and worth checking immediately.
Are these changes to the Executive Regulation or the main VAT law?
Both, at different times. Cabinet Decision No. 100 of 2024 amended the Executive Regulation (operational detail). Federal Decree-Law No. 16 of 2025 amended the VAT Decree-Law itself (primary legislation), which is the more significant of the two changes.
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How Tax Consultant Dubai Can Help
An old VAT credit balance sitting unreviewed, or a supplier relationship that has never been checked for compliance red flags, are exactly the kind of gaps these amendments were built to catch. Our VAT refund and VAT accounting teams can check whether an existing credit balance is close to its five-year window before it lapses.
Contact Tax Consultant Dubai today to have your VAT position reviewed against the current rules before a credit balance or a supplier issue becomes a problem.
