Miqat Chartered Accountants LLC brings you the latest update on the major changes coming to the UAE Tax Procedures Law and VAT Law, effective 1 January 2026. These reforms introduce clearer timelines, easier compliance, stronger FTA authority, and a new R&D Tax Credit designed to support innovation across the UAE. If you operate in Dubai, Abu Dhabi, Sharjah, or anywhere in the UAE, these updates will directly impact how you handle VAT, refunds, accounting, and corporate tax compliance.

Key Tax Changes Coming to the UAE in 2026

1. Introduction of a Clear Five-Year Limitation Rule

The UAE has officially set a five-year statute of limitations for refund claims, tax corrections, and FTA actions. This ensures transparency and certainty for all businesses.

• For Businesses: Refund claims for VAT credit balances must be submitted within five years.
• For the FTA: Adjustments to your credit can only be made within the same period.
• Late Claim Flexibility: Extra time is granted if the credit arises after or near the deadline.
• Transitional Relief: Older credit balances expiring before or within 2026 get a one-year grace period (until 1 January 2027).

2. Extended FTA Audit Rights in Special Cases

If a refund claim is filed in the final year of the limitation period, the FTA gets an additional two years to audit and issue an assessment. This highlights the importance of maintaining complete and accurate VAT records.

3. Simplified Day-to-Day VAT Compliance

The amendments make operations easier for businesses by reducing administrative burdens:

• No need to issue tax invoices to yourself for certain imports.
• Most errors can now be corrected directly in the next VAT return.
• Input tax claims are disallowed if linked to tax evasion transactions.
• The FTA now has authority to issue binding directions to clarify tax law interpretations.

4. New R&D Tax Credit: 30%–50% Refundable Incentive (Starting 2026)

The UAE will introduce a powerful R&D Tax Credit for tax periods beginning 1 January 2026. This initiative supports innovation and technological advancement.

• Businesses can claim a 30%–50% tax credit on eligible R&D costs.
• The tax credit is refundable, offering possible cash-back benefits.
• Guidelines follow international OECD Frascati standards.

This is expected to benefit companies involved in technology, engineering, aviation, manufacturing, R&D, and digital innovation.

What Businesses Should Do in 2025

• Review VAT credit balances and refund timelines.
• Prepare for possible FTA audit extensions.
• Update accounting systems for the 2026 rules.
• Assess R&D expenditures for tax credit eligibility.
• Conduct a tax health check to avoid penalties.

Why Choose Miqat Chartered Accountants LLC?

Miqat Chartered Accountants LLC is a trusted tax advisory and accounting firm serving businesses across Dubai, Abu Dhabi, and the UAE. We help companies stay compliant, reduce tax risks, and benefit from the latest reforms.

Our UAE Tax Services Include:

• Corporate Tax Registration & Filing
• VAT Registration, Filing & Advisory
• VAT Refund Assistance & Credit Balance Review
• FTA Audit Support & Representation
• Excise Tax Compliance
• Accounting & Bookkeeping
• Tax Health Check & Compliance Review
• R&D Tax Credit Evaluation (Starting 2026)

Final Thoughts

The UAE’s 2026 tax reforms represent a major step toward transparency, innovation, and global alignment. With clearer deadlines, reduced administrative confusion, and strong incentives for R&D, businesses now have more certainty than ever. As you prepare for the upcoming changes, Miqat Chartered Accountants LLC is here to provide expert guidance and complete tax compliance support. Stay compliant, stay confident, and make 2026 your most organized financial year yet.