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The Federal Tax Authority (FTA) has introduced amendments effective 1 January 2026 to the following
- Tax Procedures Law [Federal Decree-Law (FDL) No. 28 of 2022, as amended by FDL No. 17 of 2025]; and
- VAT Law [Federal Decree-Law No. 8 of 2017, as amended by FDL No. 16 of 2025].
These changes establish statutory timelines for refunds and credit utilization, refine Voluntary Disclosure obligations, and harmonize limitation rules, while clarifying reverse-charge compliance and strengthening anti-evasion safeguards for input tax. The following tables provide article-level comparisons with Nexdigm Remarks for practical guidance.
I. Federal Decree-Law No. 28 of 2022 (Tax Procedures) Amendments Effective 1 January 2026
| Article | Earlier Provision | Amended Provision | Nexdigm Comments |
|---|---|---|---|
| 9(3) | Authority may allocate overpayments or credit balances to settle Tax or amounts due; no explicit statutory time limit. | Allocation or utilization of overpayments/credit balances must occur within five (5) years from the end of the relevant Tax Period referred to in Article 38(2). | Introduces a statutory five-year limit for allocation/use of credits; align remittance instructions and credit ageing reports to the five-year horizon. |
| 10(5) | Voluntary Disclosure (VD) required for any error or omission even where there is no difference in Due Tax. | Where there is no difference in Due Tax, correction must be made by Voluntary Disclosure in the cases specified by the Authority, or via a Tax Return in other cases; VD remains mandatory for underpaid tax or overstated refunds. | Clarifies VD scope; reduces burden for non-impact errors; update SOPs to route immaterial corrections via returns where permitted. |
| 38 | Refund framework without statutory deadline; rights not time barred. | Refund of credit balance must be requested within five (5) years from end of relevant Tax Period; exceptions: one-year (Authority decision/last 90 days) and ninety (90) days (other late cases); right lapses if deadlines are missed; transitional one-year relief applies. | Implement refund calendars; initiate legacy credits for filing/utilization; leverage transitional window during 2026. |
| 46(4) | No specific rule for audits beyond limitation for late refund cases. | Authority may audit or issue assessments after five (5) years only for refund applications submitted in the fifth year or under Article 38 exceptions; completion required within two (2) years of refund request. | Maintain robust documentation for late refund filings; diarize two-year audit completion timeline. |
| 46(6) | VD barred after five (5) years. | Exception permits VD relating to pending refund applications within two (2) years from refund request date unless Authority has issued a decision; transitional relief applies. | Align VD timing with refund workflows; diarize two-year VD window for refund-linked matters. |
| 54 bis | Not present. | Authority may issue binding directions on application of tax laws to transactions; binding on both Authority and taxpayers. | Monitor and adopt binding directions to standardize positions and reduce interpretive disputes. |
II. Federal Decree-Law No. 8 of 2017 (VAT)
| Article | Earlier Provision | Amended Provision | Nexdigm Comments |
|---|---|---|---|
| 48 - Reverse Charge | Registrant treated as making a taxable self-supply and responsible for accounting and obligations; no explicit exception for self-invoicing. | Confirms obligations with the exception of issuing a Tax Invoice to himself under reverse charge. | Removes self-invoicing requirement; ensure retention of import documents and supporting evidence per Executive Regulation. |
| 74(3) - Excess Recoverable Input Tax | Excess recoverable tax could be carried forward without explicit limitation. | Excess may be carried forward for not exceeding five (5) years from end of the Tax Period; right lapses if not refunded or used within this period. | Institute rolling five-year calendar; prioritize legacy balances for refund/offset before lapse. |
| 54 bis - Anti-evasion Input Tax | No VAT-specific denial standard for input tax linked to evasion. | Authorities may reject input tax if supply is part of a tax-evasion chain and taxpayers know or should have known; failure to verify integrity may constitute constructive knowledge. | Elevate supplier due diligence (TRN validation, licensing, substance checks); document compliance to mitigate denial risk. |
| 79-bis - Statute of Limitation | VAT-specific limitation article allowed extended windows for audits and VDs. | Article repealed; limitation now governed under Tax Procedures Law. | Harmonizes limitation architecture; compute timelines under TPL for audits and refund-linked VDs. |
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
