Dubai Accountant's Business Frontline: "Key Updates: UAE Tax Reforms (Dec 2025 Announcement)"

IIn December 2025, the UAE Federal Tax Authority (FTA) announced amendments streamlining compliance while enforcing stricter timelines.

1. VAT: Reverse Charge & 5-Year Limit
*No "Self-Invoices": Reverse charge compliance is simplified. Issuing internal "Self-Invoices" for imports is no longer required; retaining vendor invoices now suffices.
*Refund Expiry: A strict 5-year statute of limitations applies. Input VAT not claimed within 5 years of the relevant period is permanently forfeited. Immediate review of aged balances is advised.

2. Corporate Tax: Audit & Credit Limits
*Audit Window: The audit look-back period is codified at 5 years (15 years for fraud), improving certainty for document retention policies.
*Credit Expiration: Refund/credit claims are strictly capped at 5 years. Rights can no longer be carried forward indefinitely; expiration dates must be monitored.

3. Penalties & Interest (Decision No. 129)
*Lower Fines: Late filing penalties are now fixed "event-based" fines (e.g., AED 500 first offense; AED 2,000 repeat) instead of cumulative monthly charges, reducing the financial burden.
*Interest (14%): Late payment interest is unified at 14% per annum. While calculation is simpler, the rate remains high. Timely payment is critical to avoid punitive costs.

Shingo Okamoto
CPA at the Japan Desk of Alwasiq Management Consultants. After working for five years at a major audit firm (EY), he became independent and established a tax firm in Minato-ku, Tokyo. He currently provides accounting and tax services to Japanese companies in Dubai.
shingo@alwasiq.net

Alwasiq Management consultants
An accounting firm based in Dubai's Business Bay, offering tax advisory services to over 100 Japanese companies through its Japan Desk.
https://alwasiq.net/jp/