Prime Highlights
- The UAE has rolled out legislative amendments to corporate tax, VAT, and the Commercial Companies Law to modernise its legal framework and improve the business environment.
- The reforms aim to enhance transparency, administrative efficiency, and flexibility while supporting long-term economic diversification.
Key Facts
- From January 1, 2026, VAT amendments will simplify compliance, introduce a five-year limit for refundable VAT claims, and ease reverse charge invoicing rules.
- Updates to the Commercial Companies Law allow multiple classes of shares and introduce non-profit companies that reinvest profits to achieve their objectives.
Background
The UAE has introduced a series of legislative amendments covering corporate tax, value-added tax (VAT), and the Commercial Companies Law, as part of its efforts to strengthen the business environment and modernise its legal framework.
According to the UAE Government Media Office, changes to the corporate tax law clarify how tax liabilities should be calculated and settled when tax credits or incentives apply. Under the amendments, tax payments will be settled in a specific order. Companies must first use withholding tax credits, followed by foreign tax credits and any other Cabinet-approved incentives or reliefs. Any remaining corporate tax must then be paid. The changes also allow taxable entities to claim payments for unused tax credits, subject to defined timelines and procedures.
Separately, the Ministry of Finance issued Federal Decree-Law No. (16) of 2025, which amends parts of the VAT law. From January 1, 2026, the government will change the VAT to make it easier to follow, keep it transparent and match global standards.
One important change lets taxable persons skip issuing self-invoices under the reverse charge rule if they keep proper records. The amendments also set a five-year limit to submit claims for recovering extra refundable VAT after tax reconciliation.
In addition, updates to the Commercial Companies Law are designed to improve flexibility and competitiveness. A new federal decree-law introduces the concept of a non-profit company, which reinvests its profits to meet its objectives rather than distributing them to shareholders.
The law also allows companies to issue multiple classes of shares with different rights related to voting, profit sharing, and liquidation, as set out in their articles of incorporation.
The government said the reforms support administrative efficiency and align with the UAE’s long-term economic diversification goals.
