UAE Introduces Corporate Tax, VAT and Companies Law Amendments to Strengthen Business Environment The legislative updates form part of the UAE's broader efforts to modernise its legal and tax frameworks, improve administrative efficiency, and support long-term economic diversification.

The UAE has recently issued a series of legislative amendments covering corporate tax, value-added tax (VAT), and the Commercial Companies Law, as part of ongoing efforts to enhance regulatory clarity, simplify procedures, and strengthen the country's business-friendly framework.

Amendments to the corporate tax law clarify how tax liabilities should be calculated and settled when tax credits, incentives, or reliefs apply. According to a statement from the UAE Government Media Office, tax liabilities will be settled sequentially, beginning with the utilization of withholding tax credits, followed by foreign tax credits, and then any other Cabinet-approved incentives or reliefs. Any remaining corporate tax due must be paid. The decree also grants taxable persons the right to claim payments for unutilized tax credits, subject to specific timelines and procedures.

Separately, the Ministry of Finance has issued Federal Decree-Law No. (16) of 2025, amending provisions of the VAT law. The changes will take effect from January 1, 2026, and aim to simplify tax procedures while maintaining transparency and alignment with international standards. The amendments remove the requirement for taxable persons to issue self-invoices under the reverse charge mechanism, provided supporting documentation is retained. A five-year time limit has also been introduced for submitting claims to recover excess refundable VAT after reconciliation.

In addition, the UAE has amended the Commercial Companies Law to enhance flexibility and competitiveness. A new federal decree-law introduces the concept of a non-profit company, which reinvests net profits to achieve its stated objectives without distributing profits to partners or shareholders. The changes also allow for more advanced capital structures, including multiple categories of shares with varying rights related to voting, profit distribution, redemption, and liquidation, as defined in a company's articles of incorporation or bylaws.