Federal Decree-Law No. 17 of 2025: What the New Tax Procedures Law Means for UAE Audits

The UAE tax framework underwent an important procedural update with the issuance of Federal Decree-Law No. 17 of 2025, which amends Federal Decree-Law No. 28 of 2022 on Tax Procedures. The amendments came into effect on 1 January 2026 and introduce changes affecting tax audits, tax assessments, refund claims, voluntary disclosures, credit balances, and the Federal Tax Authority’s administrative powers.

For businesses and audit firms in the UAE, the changes are important because the Tax Procedures Law provides the common procedural framework supporting several federal taxes, including Corporate Tax, Value Added Tax and Excise Tax. The amendments are intended to create clearer and more consistent procedures while strengthening the administration and enforcement of UAE tax legislation.

This article explains the main changes introduced by Federal Decree-Law No. 17 of 2025 and what businesses should consider when preparing for tax audits, maintaining records, managing refund claims, and reviewing their tax compliance processes.

What Is the UAE Tax Procedures Law 2025?

The UAE Tax Procedures Law 2025 refers to the amendments introduced through Federal Decree-Law No. 17 of 2025 to Federal Decree-Law No. 28 of 2022 on Tax Procedures.

Federal Decree-Law No. 28 of 2022 established a unified procedural framework for UAE tax administration. It covers matters such as tax registration, tax returns, record keeping, tax audits, assessments, refunds, voluntary disclosures, administrative penalties, disputes, and limitation periods.

Federal Decree-Law No. 17 of 2025 does not replace the Tax Procedures Law with an entirely separate law. Instead, it amends specific provisions of the existing framework to clarify and update how certain tax procedures operate.

The Ministry of Finance stated that the amendments are intended to enhance the efficiency of the tax system, strengthen transparency and fairness, establish clearer procedures, and improve financial discipline.

When Did Federal Decree-Law No. 17 of 2025 Take Effect?

Federal Decree-Law No. 17 of 2025 was issued in 2025 and became effective on 1 January 2026.

Businesses therefore need to consider the amended provisions when reviewing tax procedures and compliance activities carried out from the effective date onward. Transitional provisions also apply to certain existing tax credit balances and refund situations.

Why Was the Tax Procedures Law Amended?

The amendments are part of the UAE’s broader effort to develop a more consistent and structured federal tax administration framework.

The updated provisions address several areas that are important to both taxpayers and the FTA, including:

• Time limits for tax refund applications and the use of credit balances.
• Time limits applicable to tax audits and tax assessments.
• Voluntary disclosure procedures.
• Correction of certain errors in tax returns.
• Rules concerning the limitation period for tax procedures.
• Transitional treatment of certain existing credit balances.
• The FTA’s ability to issue official directions concerning the practical application of tax legislation.

The changes also contribute to greater consistency in procedural treatment across the UAE’s federal tax framework, including Corporate Tax, VAT and Excise Tax.

Federal Decree-Law No. 17 of 2025 vs Federal Decree-Law No. 28 of 2022

The original Tax Procedures Law established the basic framework for tax administration, but several provisions allowed different situations to be handled through separate limitation periods and procedural mechanisms.

Federal Decree-Law No. 17 of 2025 revises these provisions to provide more defined timeframes and specific exceptions.

The most significant areas for businesses are tax audit and assessment periods, refund claims, voluntary disclosures, credit balances, and the FTA’s administrative guidance powers.

Changes to FTA Tax Audit Rules in the UAE

One of the most important areas affected by the amendments is the limitation period for tax audits and assessments.

Under the amended rules, the general limitation period remains five years from the end of the relevant Tax Period. However, the law now clearly identifies circumstances in which the FTA can conduct an audit or issue an assessment after that standard period.

This means the headline five-year period should not be treated as an absolute end to every possible audit exposure.

Tax Audit Following an Audit Notification

Where the FTA has notified a taxpayer of the commencement of a tax audit before the standard five-year period expires, the audit or assessment may continue beyond the five-year period, subject to the statutory completion timeframe.

Under the amended framework, the audit or assessment in this situation must generally be completed within four years from the date of the tax audit notification, subject to the applicable rules and any permitted extension under the legislation.

For audit firms and their clients, this reinforces the importance of retaining complete historical records and maintaining the ability to support tax positions even after the end of the ordinary five-year period.

Tax Evasion and Failure to Register

The amended law also maintains extended limitation periods for particularly serious situations.

Where tax evasion is involved, the FTA may conduct a tax audit or issue a tax assessment within 15 years from the end of the Tax Period in which the tax evasion occurred.

Where a taxable person failed to register for tax when required, the FTA may conduct a tax audit or issue a tax assessment within 15 years from the date on which the person was required to register.

These extended periods demonstrate why businesses should maintain appropriate tax records and compliance documentation even when a tax period appears to be outside the ordinary five-year audit window.

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Tax Refund Claim Periods Have Changed

Another significant amendment concerns tax refund applications and credit balances held with the FTA.

The amended Article 38 introduces a general five-year period for requesting a refund of a tax credit balance or using the relevant balance to settle tax liabilities.

The applicable five-year period is calculated by reference to the circumstances in which the credit balance arose. This can include an overpayment, a tax return, a voluntary disclosure, an FTA assessment, or another event giving rise to the credit balance.

If a refund request is not submitted within the applicable statutory period, the right to claim the refund may expire, subject to the specific exceptions provided by the legislation.

Special Rules for Credit Balances Arising Near or After the Five-Year Period

The amended law provides specific treatment where a credit balance arises after the normal five-year period has expired or within the final 90 days of that period.

Where the credit balance arises from an FTA decision after the five-year period or during the final 90 days, the taxpayer may generally have up to one year from the date the balance arose to submit the refund request.

For certain other credit balances arising after the five-year period or during its final 90 days, the applicable refund request period can be 90 days from the date the credit balance arose.

Businesses should therefore monitor their tax accounts rather than assuming that a credit balance can remain available indefinitely.

What Are the Changes to Voluntary Disclosure Rules?

Federal Decree-Law No. 17 of 2025 also changes the treatment of certain errors and voluntary disclosures.

Under the amended rules, a voluntary disclosure is not necessarily required for every error where there is no difference in the amount of tax due. The FTA may specify the cases in which a voluntary disclosure is required for errors that do not result in a tax difference.

In other cases, the relevant error can be corrected through the applicable tax return process.

This creates a more structured distinction between errors that require a voluntary disclosure and errors that can be corrected through another tax procedure.

Businesses should nevertheless document the identification, assessment, and correction of tax errors. The fact that an error does not increase the tax payable does not mean that it should simply be ignored.

How Do the New Rules Affect FTA Audit Windows?

The amended limitation framework creates several situations in which the FTA can continue audit or assessment activity beyond the ordinary five-year period.

For example, where a taxpayer submits a voluntary disclosure during the fifth year from the end of the relevant Tax Period, the FTA may conduct a related audit or issue an assessment after the normal five-year period, subject to the applicable statutory completion period.

Similarly, where a refund application is submitted during the fifth year, the FTA may audit or assess matters related to that refund claim beyond the ordinary five-year period. In such cases, the audit or assessment is generally required to be completed within two years from the date of the refund application.

This is an important point for companies with older VAT or tax credit positions. Submitting a refund claim near the end of the normal limitation period can create a corresponding audit window relating to that claim.

New FTA Authority to Issue Official Tax Directions

Federal Decree-Law No. 17 of 2025 introduces Article 54 BIS into the Tax Procedures Law.

The provision gives the FTA an express statutory basis to issue official directions concerning the practical application of tax legislation and tax procedures.

The purpose is to support consistent implementation of the UAE tax laws and provide greater clarity on how tax provisions should be applied to particular transactions or circumstances.

For businesses and audit firms, this means that monitoring official FTA guidance becomes increasingly important. A tax position should not be assessed only by looking at the wording of the primary legislation. Relevant FTA guidance and procedural instructions should also be considered when determining how a requirement operates in practice.

How the Amendments Affect Corporate Tax, VAT and Excise Tax

The Tax Procedures Law provides a common procedural framework for federal taxes. As a result, changes to the procedural framework can affect businesses dealing with more than one type of tax.

Corporate Tax

Corporate Tax taxpayers should consider the amended rules when maintaining records, reviewing tax returns, correcting errors, managing voluntary disclosures, and monitoring the five-year limitation period.

Businesses should also ensure that their accounting records can support the information reported in Corporate Tax returns and that significant tax positions are properly documented.

VAT

VAT-registered businesses should pay particular attention to refund claims, credit balances, tax return corrections, and historical records.

Businesses that regularly claim VAT refunds should establish an internal process for monitoring the age of outstanding credit balances and identifying refund claims that may approach the applicable statutory deadline.

Excise Tax

The amended procedural framework also affects Excise Tax administration. The amendments help align the applicable limitation rules with the broader Tax Procedures Law framework.

Businesses subject to Excise Tax should therefore review their historical compliance records and ensure that their documentation supports their tax positions and returns.

What Do the New Rules Mean for Audit Firms?

The amendments have practical implications for firms conducting statutory audits, tax audits, tax compliance reviews, and other assurance engagements.

Audit and tax professionals should consider the changes when determining the period of historical information that may be relevant to a client’s tax exposure.

Important areas include:

• Reviewing the client’s historical tax compliance records.
• Assessing whether outstanding refund claims are approaching the applicable deadline.
• Identifying tax periods approaching the standard five-year limitation period.
• Evaluating whether a voluntary disclosure or tax return correction is appropriate.
• Reviewing documentation supporting historical tax positions.
• Considering whether tax audit procedures could continue beyond the standard five-year period.
• Updating tax compliance checklists and internal audit procedures.
• Updating client engagement letters where the scope of tax procedures has changed.
• Monitoring new FTA directions and guidance issued under the updated framework.

What Should UAE Businesses Do Now?

Businesses should treat the 2026 changes as an opportunity to review their tax compliance systems rather than waiting for an FTA audit or refund deadline to expose weaknesses.

1. Review Historical Tax Documentation

Companies should review whether they have complete records supporting their Corporate Tax, VAT, and Excise Tax positions for relevant historical periods.

This can include tax returns, calculations, invoices, contracts, payment records, reconciliations, correspondence with the FTA, refund applications, voluntary disclosures, and supporting accounting records.

2. Review Outstanding Credit Balances

Businesses should reconcile their FTA tax accounts and identify outstanding credit balances. Particular attention should be given to balances that are approaching the five-year refund claim period.

Companies should establish who is responsible for monitoring these balances and determining whether a refund request or use of the balance is required.

3. Review Tax Errors and Corrections

Businesses should review previously identified tax errors and confirm that each issue has been corrected through the appropriate procedure.

This is particularly relevant for errors that do not change the amount of tax payable because the amended rules distinguish between cases requiring a voluntary disclosure and other errors that can be corrected through the relevant tax return process.

4. Strengthen Tax Audit Documentation

Companies should maintain an organised audit file containing the records needed to demonstrate how tax figures were calculated and how significant tax positions were determined.

A well-organised documentation system can reduce the time required to respond to an FTA information request and help the company provide consistent evidence during a tax audit.

5. Update Engagement Letters

Audit and tax firms should review their engagement letters and service descriptions to ensure that the scope of work accurately reflects the services being provided.

Where an engagement includes tax compliance reviews, refund assistance, voluntary disclosure support, tax audit support, or historical tax analysis, the relevant scope and responsibilities should be clearly documented.

6. Update Internal Compliance Checklists

Finance and tax teams should update their internal compliance calendars to include:

• Tax return filing deadlines.
• Tax refund claim deadlines.
• Credit balance monitoring.
• Voluntary disclosure procedures.
• Historical tax record retention.
• Potential audit limitation dates.
• FTA correspondence and response deadlines.

Business Impact: Why Documentation Matters More Than Ever

The amendments do not mean that every company will face a longer tax audit. The general limitation period remains five years in the ordinary case.

However, the revised rules create specific situations in which the FTA can conduct audits or issue assessments after that period. This makes the quality and accessibility of historical documentation particularly important.

For example, a company that submits a refund claim during the fifth year of a Tax Period should be prepared to support the underlying transactions and records relevant to that claim. Similarly, businesses involved in tax evasion or that failed to register when required can face significantly longer periods of potential tax exposure.

Strong record keeping therefore remains one of the most practical ways for businesses to manage tax compliance risk.

Transitional Rules for Existing Tax Credit Balances

Federal Decree-Law No. 17 of 2025 includes transitional provisions for certain taxpayers with existing credit balances.

Where the applicable five-year period had already expired before 1 January 2026, or was due to expire within one year from that date, the taxpayer may benefit from a transitional period to submit a refund request.

The Ministry of Finance has stated that eligible taxpayers can generally submit such refund requests within one year from 1 January 2026. This means that the transitional window can be particularly relevant during 2026 for businesses with older tax credit balances.

Businesses with historical credits should therefore review their FTA accounts and supporting records promptly rather than assuming that older balances will remain available indefinitely.

Practical UAE Tax Procedures Law 2025 Compliance Checklist

• Review Corporate Tax, VAT, and Excise Tax records.
• Identify historical tax periods approaching the five-year limitation period.
• Review outstanding FTA credit balances.
• Identify refund claims approaching their statutory deadline.
• Review previously identified tax errors.
• Confirm whether corrections were made through the appropriate procedure.
• Review voluntary disclosures submitted during the fifth year of a Tax Period.
• Maintain supporting documentation for historical tax positions.
• Review FTA correspondence and outstanding requests.
• Update internal tax compliance calendars.
• Update audit and tax engagement procedures.
• Review engagement letters where tax services are provided.
• Monitor new FTA directions and official guidance.
• Train finance and tax teams on the amended procedures.

How AFD Auditors Can Support UAE Businesses

The changes introduced by Federal Decree-Law No. 17 of 2025 make it increasingly important for businesses to maintain reliable accounting records, understand their tax positions, and monitor the applicable procedural deadlines.

AFD Auditors provides statutory audit and tax audit services in the UAE to help businesses review their financial records, assess compliance processes, identify documentation gaps, and prepare for tax-related reviews.

Our team can assist businesses with audit procedures, tax compliance reviews, financial record assessments, and documentation preparation relevant to UAE tax requirements.

If your business has outstanding tax credit balances, historical tax issues, pending refund claims, or concerns about an FTA audit, reviewing your records early can help you identify procedural deadlines and documentation gaps before they become more difficult to address.

Frequently Asked Questions

What is Federal Decree-Law No. 17 of 2025?

Federal Decree-Law No. 17 of 2025 is an amendment to Federal Decree-Law No. 28 of 2022 on Tax Procedures. It changes provisions concerning tax audits, assessments, refund claims, credit balances, voluntary disclosures, limitation periods, and FTA administrative directions.

When did the new UAE Tax Procedures Law amendments become effective?

The amendments introduced by Federal Decree-Law No. 17 of 2025 became effective on 1 January 2026.

Did the standard five-year FTA audit period change?

The general limitation period remains five years from the end of the relevant Tax Period. However, the amended law specifies circumstances in which the FTA can conduct an audit or issue an assessment beyond that period, including certain refund claims, voluntary disclosures submitted during the fifth year, tax evasion, and failure to register.

Can the FTA audit a company more than five years after a tax period?

Yes, in specified circumstances. The amended framework allows certain audits or assessments to continue beyond the standard five-year period. Tax evasion and failure to register can result in a limitation period of up to 15 years, subject to the applicable statutory conditions.

How long do businesses have to claim a tax refund?

The amended Article 38 generally provides a five-year period for submitting a refund request for a tax credit balance, subject to specific exceptions for certain credit balances arising after the five-year period or during its final 90 days.

Do all tax errors require a voluntary disclosure?

No. The amended rules provide a distinction between cases where a voluntary disclosure is required and other errors that can be corrected through the relevant tax return process. The FTA may specify cases where a voluntary disclosure is required for errors that do not result in a difference in tax.

Does the law apply to VAT and Corporate Tax?

Yes. The Tax Procedures Law provides a common procedural framework for UAE federal taxes, including Corporate Tax and VAT. The procedural changes should therefore be considered alongside the specific provisions of the relevant tax legislation.

Conclusion

Federal Decree-Law No. 17 of 2025 represents an important update to the UAE’s tax administration framework. Effective from 1 January 2026, the amendments introduce clearer rules for tax refunds, credit balances, voluntary disclosures, tax audits, assessments, and the FTA’s administrative guidance.

For businesses, the key message is the importance of proactive tax compliance. Companies should review their historical documentation, reconcile outstanding tax balances, monitor refund deadlines, assess unresolved errors, and ensure that their tax records can support their reported positions.

For audit and tax professionals, the amendments also provide a reason to update engagement procedures, compliance checklists, client documentation requirements, and audit planning processes.

Businesses that regularly review their tax records and maintain complete supporting documentation will be better positioned to respond to FTA enquiries and manage the procedural requirements introduced under the updated UAE Tax Procedures Law.