The latest amendments related to UAE Value Added Tax is discussed as follows:
1. Cabinet Decision No. 17 of 2026: Amendments to Executive Regulation on UAE Tax Procedures
- Extended Record Keeping (Refund Cases): Records must now be kept for an additional two years (seven in total) for the pending refund applications.
- Voluntary Disclosure for Errors: Errors affecting tax payable over AED 10,000 require a Voluntary Disclosure within 20 business days; smaller errors can be rectified in the subsequent VAT return if available. This is now extended to refund applications also.
- Voluntary Disclosure with no tax impact: The requirement in the Executive Regulations for Voluntary Disclosures on errors not impacting tax is now removed, though the obligation still remains under the Tax Procedures Law.
- Seizure of documents and assets: The FTA is now authorized to extend the seizure and retention of documents/assets during audits, provided the concerned person is notified.
- Refund of Credit Balances: Tax refund is now officially updated to “refund of credit balance,” clarifying that procedures apply to all excess amounts.
- Data sharing ensuring confidentiality: Official agreements are required for sharing taxpayer information with government entities, enhancing confidentiality.
2. VAT Guide (VATGRH1): VAT Refund for UAE Nationals Building New-Residences – The refund for new residences has evolved into a fully digital process.
The Key Highlights are as follows:
- Application: Through the Maskan Smart App or EmaraTax portal.
- Deadline: Must apply within 12 months of the residence’s completion.
- Eligibility: Must be a UAE national for a new personal residence (not for commercial use).
- Claim Scope: UAE nationals to claim a VAT refund on construction costs (materials and contractor services).
- Deadline: Must apply within 12 months of the residence’s completion.
- Evidence: Requires a Certificate of Completion, contractor invoices, and proof of payment.
3. Cabinet Decision No. 129 of 2025: Administrative Penalties for Violation of Tax Laws in the UAE
The new provisions aim to streamline penalty structures across all tax laws in the UAE. A detailed comparison of the amended penalties—resulting in either reductions or increases—is presented in the table below.
| Sr. | Violation type | Old regime (until 13 Apr 2026) | New regime (from 14 Apr 2026) | Effect |
|---|---|---|---|---|
| 1 | Failure to keep required records | AED 10,000 first; AED 20,000 if repeated | AED 1,000 for each violation; AED 20,000 if repeated within 24 months | Reduction |
| 2 | Late payment of VAT | 2% of unpaid VAT immediately + 4% monthly thereafter on balance (up to 300%) | 14% per annum, non-compounding, on unpaid VAT, applied monthly from the day after the due date | Reduction |
| 3 | Incorrect VAT return | AED 1,000 first; AED 2,000 if repeated | AED 500 (if an underpayment exists), or nil if corrected before the due date / no tax difference | Reduction |
| 4 | Failure to submit records in Arabic | AED 20,000 | AED 5,000 | Reduction |
| 5 | Failure to update tax records | AED 5,000 first; AED 10,000 if repeated | AED 1,000 per violation; AED 5,000 if repeated within 24 months | Reduction |
| 6 | Failure to notify legal representative appointment | AED 10,000 | AED 1,000 | Reduction |
| 7 | Voluntary Disclosure (VD) – tax difference penalty | Bracket system: 5% (within 1 yr), 10% (2 yrs), 20% (3 yrs), 30% (4 yrs), 40% (after 4 yrs) | 1% per month (or part) on the tax difference from the day after the due date until the VD is submitted | Increase |
| 8 | Failure to submit VD before audit | 50% of tax difference + 4% monthly on unpaid tax | 15% fixed + 1% monthly until the VD is submitted or an assessment is issued | Reduction |
| 9 | Failure to calculate VAT on behalf of another person | Late tax penalties + percentage model (up to 300%) | 14% per annum penalty on unpaid VAT (same structure) | Reduction |
Disclaimer
The information provided in this document is for general informational purposes only and does not constitute professional tax or legal advice. While we strive to provide accurate and up-to-date information, tax laws and regulations are subject to change and interpretation by the Federal Tax Authority (FTA). We recommend consulting with a qualified tax professional to discuss your specific business circumstances and ensure full compliance with the UAE Tax Laws.
