Several important UAE tax changes began in January 2026. Businesses should review old VAT credits, reverse-charge documentation and the new rules for eligible metal-scrap transactions.
Tax Procedure Law: a five-year window for tax credits
Federal Decree-Law No. 17 of 2025 took effect on 1 January 2026. In general, a taxpayer has five years from the end of the relevant tax period to request a refund of a credit balance or use it to settle tax liabilities. Special transitional relief applies to certain older balances whose five-year period had already expired or was due to expire within one year of 1 January 2026. Those cases may have a one-year window from that date to submit a request, subject to the law’s conditions.
Businesses should reconcile the EmaraTax account to their ledgers and identify unused VAT or other tax credits before relying on the general deadline. A credit shown in accounting records is not, by itself, proof that a refund request has been filed.
VAT reverse charge: keep evidence instead of issuing a self-invoice
Federal Decree-Law No. 16 of 2025 took effect on 1 January 2026. When applying the reverse-charge mechanism, taxable persons are no longer required to issue a self-invoice, but they must retain the supporting transaction documents specified by the Executive Regulation. The FTA may also deny input-tax deduction where it finds that a supply forms part of a tax-evasion arrangement. Supplier checks and a complete audit trail remain important.
Metal-scrap trading: reverse charge from 14 January
Cabinet Decision No. 153 of 2025 applies the reverse-charge mechanism to eligible metal-scrap supplies between UAE VAT registrants from 14 January 2026. The buyer accounts for the VAT when the purchase is for resale or processing into materials used to manufacture new products; the supplier does not charge VAT on an eligible supply. Before the transaction, the buyer must provide a written declaration confirming its VAT registration and intended use. The supplier must verify the buyer’s registration, retain the declaration and show on the invoice that reverse charge applies.
What businesses should do
- List and age all tax credit balances; note the relevant period-end and any transitional deadline.
- Update reverse-charge checklists and retain contracts, invoices, declarations and supplier-registration evidence.
- Review metal-scrap invoices dated from 14 January 2026 and confirm both parties followed the required steps.
Official sources: Tax Procedures Law amendments; VAT Law amendments; metal-scrap reverse charge.
This update is general information, not advice for a particular transaction. Apply the legislation and FTA guidance to your facts.
