UAE VAT changes 2026: the 5-year refund limit, reverse charge and audit window

Federal Decree-Laws No. 16 and No. 17 of 2025 changed several VAT and tax procedure rules from 1 January 2026. The change with a hard deadline is the new 5-year limit on refunds of excess input tax: credit balances older than five years can only be claimed until 31 December 2026. Self-invoicing under the reverse charge is no longer required, and the Federal Tax Authority's (FTA) audit window can extend up to 15 years in cases of evasion or non-registration.

Key points

• A 5-year limit now applies to claiming refunds of excess input tax and credit balances.
• Balances older than five years can be claimed until 31 December 2026. After that, they are at risk.
• You no longer need to issue self-invoices for reverse-charge supplies. You still account for the VAT.
• The FTA can look back up to 15 years where there is tax evasion or a failure to register.
• The VAT rate (5%) and registration thresholds have not changed.

1. The 5-year limit on VAT refunds

What changed

Before 2026, a business could carry a VAT credit for years and claim a refund whenever it chose. From 1 January 2026, refunds of excess input tax and other credit balances must be claimed within five years. The five years are generally counted from the end of the tax period in which the credit arose.

There is a transition window. Credits that were already more than five years old on 1 January 2026 can still be claimed, but only until 31 December 2026.

Who should check now

You are most likely to have old credits if you:

• Export goods or services, so most of your sales are zero-rated.
• Made large capital purchases, such as fit-out, equipment or property.
• Registered for VAT before you started trading, so you paid VAT on set-up costs with no sales.
• Are a real estate developer or work on long projects.
• Have simply let a credit sit on your EmaraTax account instead of claiming it.

Examples

Tax period the credit arose in	Five years from period end	What to do
Quarter ended 30 June 2020	Already passed	Claim by 31 December 2026
Quarter ended 31 December 2021	31 December 2026	Claim by 31 December 2026
Quarter ended 31 March 2022	31 March 2027	Claim before 31 March 2027
Quarter ended 30 September 2026	30 September 2031	Normal 5-year limit applies

How to claim

1. Find your credit balance on your EmaraTax account and match it to the periods it came from.
2. Pull the supporting documents. Tax invoices for the input tax, import declarations, contracts and proof of payment.
3. Check the credit is right. Look for input tax claimed on blocked items (such as entertainment or non-business use) or on invoices without a valid TRN. It is better to find these yourself.
4. Submit the refund request on EmaraTax.
5. Respond quickly if the FTA asks for more information.

If the review turns up an error in a past return, correct it. Since 14 April 2026, voluntary disclosure penalties are lower, at around 1% per month of the tax difference.

2. Reverse charge: self-invoicing no longer required

What changed

Under the reverse charge, the buyer accounts for VAT instead of the supplier. This applies, for example, to services you buy from suppliers outside the UAE and to imports of goods. Before 2026, the rules expected you to issue a tax invoice to yourself (a self-invoice) for these purchases.

From 1 January 2026, you no longer need to issue self-invoices for reverse-charge supplies. You still need to:

• Account for the VAT in your return. Imported services go in Box 3 (supplies subject to the reverse charge). Goods imported through customs go in Box 6.
• Recover the input tax where you are entitled to.
• Keep the supporting documents: the supplier's invoice, the contract, and customs import documents for goods.

What to update

• Remove self-invoice steps from your accounting procedures and ERP workflows.
• Make sure your system still posts the reverse-charge VAT correctly, because dropping the self-invoice should not drop the VAT entry.
• Train whoever processes foreign supplier bills.

A quick reverse-charge example

A Dubai design agency pays a software subscription of AED 10,000 to a supplier based outside the UAE. The supplier does not charge UAE VAT.

• The agency reports AED 10,000 in Box 3 and AED 500 of output VAT (5%).
• If the subscription is used for taxable business activity, the agency can recover the AED 500 as input tax in the same return.
• The net VAT effect is nil, but both sides must appear in the return.
• From 2026, the agency keeps the supplier's invoice and contract as evidence. It no longer needs to issue a self-invoice.

3. A longer look-back for evasion and non-registration

The FTA normally audits within five years of the end of a tax period. The amended rules confirm it can go further back, up to 15 years, where there is tax evasion or where a business should have registered and did not.

What this means in practice:

• If you traded above AED 375,000 without registering, the exposure does not fade after five years. Register now and correct the position through the proper process.
• Keep records for the full period. Corporate tax needs records for 7 years. General VAT records are 5 years, and real estate VAT records are 15 years. Storing everything for at least 7 years is the safe default.

A quick VAT health check

While you review credits and reverse-charge processes, check a few other areas at the same time:

• Blocked input tax. VAT on entertainment for non-employees, some motor vehicles and personal use can't be recovered.
• Invoice validity. Input tax claims need a valid tax invoice with the supplier's TRN.
• Zero-rated exports. Keep proof of export for every zero-rated sale.
• Credit notes. Make sure they reduce output tax in the correct period.
• Registration details. Confirm your trade licence, address and authorised signatory are up to date on EmaraTax.

What to do before 31 December 2026

Action	Who it affects	When
Identify VAT credits older than five years	Anyone with a credit balance	Now
Submit refund requests for those credits	Businesses with old credits	By 31 December 2026
Remove self-invoicing from reverse-charge processes	Importers of goods and services	Already in force since 1 January 2026
Review past returns for errors	All VAT-registered businesses	Before the FTA contacts you
Check whether you should have registered earlier	Unregistered businesses near AED 375,000	Now
Confirm your record-keeping covers 7 years or more	All businesses	Ongoing

Next steps

If you have a credit sitting on your EmaraTax account, start with the refund review. It has the only hard deadline. Read the official updates on the FTA website and the Ministry of Finance website.

We can reconcile your VAT history as part of our accounting service in Dubai, and prepare the refund request and future returns. To see what that would cost, get an instant estimate. For ongoing quarterly filing, see our VAT return filing service, or our VAT services hub for registration and deregistration.