UAE Corporate Tax Amendments: What You Must Know?

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The corporate tax framework in the UAE is undergoing a strategic shift, and if you’re a business operating within the country, staying up to date with the latest amendments is no longer optional, it’s essential.

On December 15, 2025, the UAE government issued amendments to the Federal Decree-Law No. 47 of 2022, reshaping how corporate tax is calculated, credited, and claimed. These changes aim to reduce ambiguity in corporate tax settlements and ensure smoother compliance for businesses across various sectors.

One of the most notable updates is the right for businesses to claim payments for unused tax credits, a move that brings greater flexibility and clarity.

Additionally, there’s a new structured process for settling corporate tax liability, ensuring each form of credit or incentive is applied in the correct order. These developments underscore the government’s continued efforts to build a transparent and predictable tax regime that supports economic growth and investor confidence.

What Are the Latest UAE Corporate Tax Amendments?

On December 15, 2025, the UAE government announced key amendments to its corporate tax law, specifically revising provisions under the Federal Decree-Law No. 47 of 2022. These changes form part of a broader strategy to refine the corporate tax system and make it more adaptable to real-world business practices.

One major update involves allowing taxpayers the right to claim payments in respect of any unused corporate tax credits. Previously, there was uncertainty around how and when such credits could be utilized or refunded.

With this amendment, that gap has been addressed with defined conditions and procedures. The UAE government clarified the mechanism by which corporate tax is settled, including a newly introduced order of applying various tax credits and incentives.

This enhanced legal clarity is particularly significant for businesses operating across borders or with multiple income sources. The new regulations reduce ambiguity and promote consistency, making compliance easier for companies of all sizes. These amendments mark a clear step toward a more streamlined and effective corporate tax regime.

Why Were These Amendments Introduced?

The amendments were introduced to eliminate legal ambiguity and establish a clearer structure for corporate tax settlement in the UAE. As the nation builds out its tax framework, these updates reflect the government’s responsiveness to feedback from businesses and advisors.

Key objectives include:

Clarifying the order in which different types of tax credits should be applied
Defining procedures for claiming unused tax credits
Reducing inconsistent interpretations of corporate tax rules
Enhancing transparency in the tax system
Ensuring administrative procedures align with actual business operations

Prior to these changes, many businesses struggled with uncertainty, especially when dealing with foreign income or complex group structures.

The corporate tax law lacked detail on how and when withholding and foreign tax credits could be used, which led to varying interpretations and potentially unequal tax outcomes.

By refining the framework, the government aims to create a more stable tax environment that supports compliance while addressing real-world scenarios. These updates aren’t about introducing new taxes but refining the process to make it clearer and more predictable for businesses operating in the UAE.

How Is Corporate Tax Now Calculated and Settled?

The process of settling corporate tax in the UAE has now been streamlined with a clearly defined sequence. These updates were designed to make tax liability resolution more consistent and understandable for all entities.

What Is the Order of Tax Liability Settlement?

To remove uncertainty, the amendments outline a four-step sequence in which corporate tax obligations should be settled:

Withholding Tax Credit: The first credit to be applied is the withholding tax credit due to the taxable person. This is laid out in Article 46 of the corporate tax law.
Foreign Tax Credit: If a corporate tax liability still exists, the business can then utilize any available foreign tax credits, as described in Article 47.
Cabinet-Approved Incentives and Reliefs: If there’s still remaining tax due, the next step is to apply other incentives or reliefs that are approved by the UAE Cabinet, based on recommendations from the Minister.
Remaining Corporate Tax: Any final outstanding corporate tax balance, after applying all credits and reliefs, must be paid by the taxpayer as per Article 48.

This structured mechanism allows businesses to know exactly how their tax liability will be reduced by credits and ensures fairness in how incentives are applied. It also removes room for interpretation and strengthens overall transparency in the tax process.

The amendment helps especially those entities with overseas operations, as the clear sequence prevents double taxation or the omission of applicable credits due to confusion over their application order.

Can You Claim a Refund for Unused Tax Credits?

Yes, one of the most impactful updates in the recent amendment is that businesses can now claim payments for unused tax credits. This move introduces more flexibility and control for companies that may not be able to utilize all of their credits during a tax cycle.

The right to claim payments applies specifically to:

Unutilised tax credits arising from incentives or reliefs
Claims that meet all prescribed conditions and procedures
Credits that fall within the approved timelines set by the authorities

This provision is especially useful for businesses that benefit from incentive programs but operate with low profit margins, leaving them unable to apply all credits in the usual manner. Instead of letting these credits expire unused, businesses now have the option to receive a payment, which can positively impact their cash flow and financial planning.

This mechanism supports businesses with fluctuating taxable income and ensures incentives serve their intended purpose, even when direct tax offsets are not applicable.

What Role Does the Federal Tax Authority Now Play?

The amendments have also expanded the role of the Federal Tax Authority (FTA) to ensure smooth implementation and settlement of corporate tax matters. The FTA now has the legal authority to manage withheld tax amounts and approve claims for payments related to unused credits.

The responsibilities of the FTA under the new amendments include:

Withholding amounts from corporate tax revenue
Managing top-up tax revenues when applicable
Settling approved taxpayer claims related to unutilised tax credits
Issuing decisions and guidelines on the timeline and procedures for credit claims

This expanded authority is a crucial part of the new corporate tax settlement mechanism. It ensures that the process of claiming and refunding credits is not only permitted but also administratively feasible. The FTA’s involvement adds an extra layer of consistency and transparency, as it centralizes the management of credit-related claims and payments.

By giving the FTA the power to oversee these procedures, the UAE is aligning its tax system with global standards where central tax bodies play an active role in enforcing credit applications and refunds.

How Do These Amendments Impact Businesses in the UAE?

The amendments bring significant changes that directly affect how businesses in the UAE manage their tax obligations. One of the most immediate benefits is clarity. Companies now know exactly how and when they can apply various tax credits, which helps them plan more effectively.

Businesses with international operations or multiple tax incentives will particularly benefit from this update. By setting a fixed order for applying credits, the risk of misinterpretation or audit issues is greatly reduced. This supports better financial forecasting and lowers the likelihood of disputes.

Furthermore, allowing claims for unused credits improves cash flow, especially for businesses that operate in industries with irregular profits. Small and medium-sized enterprises (SMEs) will also benefit from more accessible compliance procedures and fewer bureaucratic obstacles.

In essence, the amendments enhance tax certainty, support business operations, and create a more attractive tax environment that encourages investment and growth.

What Do Experts Say About These Changes?

Industry professionals have largely welcomed the amendments, citing them as a positive step toward improving the corporate tax environment in the UAE. The clarity introduced by the new decree has been described as essential for business stability and international competitiveness.

Emphasis on Clarification, Not New Policies

Experts like Ali Nawaz, Senior Manager at Sovereign PPG, stress that the amendments are not introducing new tax concepts but rather refining existing ones. This distinction is important, as it reassures businesses that there are no new financial burdens, only improved processes.

Helps Standardize How Businesses Apply Credits

David Daly from Gulf Tax Accounting Group emphasized that the updates bring a standardized order to how credits are matched against taxable profits. This is particularly beneficial for groups with multiple sources of income and varied incentive schemes.

Avoids Inconsistent Outcomes in Tax Settlements

The lack of a clear framework previously led to varying interpretations of how credits should be applied. This inconsistency could result in different tax outcomes for similar business structures, undermining trust in the system. With the new amendments, those risks are significantly reduced.

Sets a Foundation for Future Tax Policy Evolution

By creating a more robust administrative framework, the UAE is laying the groundwork for future updates to its tax system. These changes demonstrate the government’s willingness to refine the tax environment as real-world needs evolve, while also aligning more closely with international practices.

Overall, the amendments signal the UAE’s intent to remain a globally competitive and business-friendly jurisdiction, even as it strengthens its domestic revenue systems.

What’s the Bigger Picture Around UAE Corporate Tax?

These amendments are part of a broader effort to refine the UAE’s corporate tax landscape and support long-term economic growth. The UAE first introduced its federal corporate tax system in June 2023, applying a 9 percent tax rate on business profits exceeding AED 375,000. Profits below this threshold remain exempt. In addition to corporate tax reforms, the UAE is also updating its VAT framework.

Recent VAT amendments simplify compliance by:

Eliminating the need for self-invoicing under reverse charge mechanisms
Introducing a five-year deadline for claiming excess refundable tax
Reducing the administrative burden for small businesses

These initiatives show that the UAE is transitioning to a mature tax environment without compromising its reputation as a business-friendly destination. The bigger picture reflects a balanced approach to revenue generation, compliance facilitation, and economic diversification.

By integrating these tax measures thoughtfully, the UAE is enhancing transparency, fairness, and global competitiveness in its business ecosystem.

What Should You Do to Stay Compliant?

To align your business with the new amendments, the first step is to reassess your corporate tax structure and how your credits are currently applied. Ensure your internal finance teams and advisors understand the new order of tax settlement and the eligibility criteria for credit refunds.

You should also review your existing incentive agreements and check for any unutilised credits that may now be refundable under the amended rules. Establish systems to track deadlines and documentation required for credit claims, as outlined by the Federal Tax Authority.

It’s important to remain proactive. Work closely with tax advisors to ensure you’re not missing out on newly claimable credits or unintentionally misapplying them. Staying compliant is not only about following rules but also about maximizing your business’s financial efficiency within the legal framework.

Why These Amendments Matter to You?

These amendments aren’t just legal adjustments, they have real-world implications for your financial planning, compliance, and growth strategies. Whether you’re a startup, an SME, or a multinational operating in the UAE, the clarity these changes bring can have a direct impact on your bottom line.

You now have the legal right to claim previously inaccessible tax credits, improving cash flow and operational agility. A clearly defined credit application order also reduces the risk of audits and administrative penalties. If you’ve been navigating the complexities of tax planning, this update offers a streamlined path forward.

Ultimately, these amendments reflect the UAE’s continued efforts to evolve its tax system in a way that supports businesses, maintains investor confidence, and aligns with global standards. Staying informed and compliant means you can fully leverage the benefits these changes offer.

Conclusion

The UAE’s latest corporate tax amendments mark a significant turning point in the country’s approach to business taxation. By clarifying the settlement sequence, allowing claims for unused credits, and giving more authority to the Federal Tax Authority, the country is moving toward a more mature and business-aligned tax structure.

These changes promote transparency and reduce the margin for errors or varied interpretations. Whether you’re a tax advisor, CFO, or entrepreneur, the amendments equip you with the clarity needed to operate confidently within the law.

As the UAE continues to fine-tune its tax framework, these developments are a clear signal that practical application and taxpayer convenience remain a top priority.