Five-year VAT refund period in the UAE: What financial services need to know

On January 1, 2026, amendments to the value-added tax (VAT) legislation in effect in the United Arab Emirates since 2018 came into effect. The amendments clarify the rules for the system and introduce a new procedure for the refund of input VAT. The main change is a five-year period for the refund or offset of accumulated VAT. Companies can now apply for a tax credit refund only within five years of the end of the tax period. After this period, the refund is lost.

This is especially important for businesses that regularly generate input VAT: exporters, developers, logistics operators, and companies with large investment projects. Financial services are advised to review accumulated tax credits from previous years and submit all possible claims before the deadline.

The VAT rate remains at 5%—one of the lowest in the world—and mandatory company registration is required for annual turnover of at least AED 375,000. Additionally, companies can voluntarily register with a turnover of at least AED 187,500 if this is beneficial for VAT refunds on expenses and capital investments.

Practical Implications for Business

Previously, companies could carry forward accumulated VAT amounts indefinitely. Now, tax credits must be tracked and claimed promptly, otherwise they will be cancelled. This is especially true for organizations with high capital investments and long-term projects.

The following steps are important for financial services:

1. Analyze accumulated tax credits from 2018 and determine which ones are refundable.
2. Review invoice and refund documentation to ensure all data is in order for filing claims.
3. Configure the VAT accounting system to track the expiration of credits.
4. Prepare for the implementation of the electronic invoicing system (e-invoicing), which will begin in July 2026 and will require integration with accounting platforms.
5. Clarify internal procedures for classifying supplies and complying with VAT rules, including zero-rated and exempt supplies.

Context of Tax Reforms

These changes are part of the gradual modernization of the UAE tax system. A 9% corporate tax was introduced in 2023, and electronic reporting will allow tax authorities to track commercial transactions in near real time. The new rules do not make the UAE less attractive for business, but they do require a more disciplined approach to tax compliance.

For companies operating internationally, competent tax credit management not only ensures legal compliance but also leads to real savings and cash flow optimization. Missing refund deadlines or documentation errors can lead to losses and complicate work with tax authorities.

Our expert advice: financial services and business management should conduct a VAT audit now, review accumulated credits, and prepare all documents for timely refunds. At the same time, they must prepare for the transition to digital reporting and strengthen internal control processes.

If you need a detailed review of your company's VAT positions and preparation for the new rules, our team of specialists is ready to provide a personalized consultation. We will assess your current tax credits, help you prepare documents, and establish an accounting system to ensure you don't lose your refund and minimize risks.

Contact us at Antwort Law for an initial consultation and a plan of action for your business in the UAE.

Diana Gulevskaya

Head of Office in UAE
Antwort Law