Introduction
Federal Decree-Law No. 17 of 2025 introduces targeted but significant amendments to the UAE’s tax administration framework as set out in Federal Decree-Law No. 28 of 2022. This article examines those amendments in detail and considers how the new provisions differ from the rules previously contained in Federal Decree-Law No. 28 of 2022 and, where relevant, Federal Decree-Law No. 7 of 2017 on Excise Tax. This article analyses the substantive changes made by Federal Decree-Law No. 17 of 2025 to Articles 9(3), 10(5), 38 and 46, and the introduction of a new Article 54 BIS, of Federal Decree-Law No. 28 of 2022 and the repeal of Article 25 BIS of Federal Decree-Law No. 7 of 2017. The article also evaluates the broader administrative and policy implications of these reforms, including their interaction with the development of the Federal Tax Authority’s powers and the continuing progression of the UAE’s procedural tax regime. Accordingly, it provides a structured comparison between the previous framework and the revised law coming into effect on 1 January 2026.
A Further Step in the Revision of the Tax Procedures Framework
Federal Decree-Law No. 17 of 2025 forms part of a wider legislative trajectory aimed at consolidating and modernising federal tax administration. Together with the recent overhaul of administrative penalties, the amendment reflects a deliberate policy move toward a unified, coherent and procedurally consistent tax system. The introduction of clearer limitation periods, streamlined refund procedures, and the clarification of the Federal Tax Authority’s powers mirrors the principles of proportionality, predictability and coherent system-wide administration that have characterised recent federal tax reforms. The 2025 amendments therefore represent another structured step in completing the transition from the 2017 framework to a more developed regime anchored in Federal Decree-Law No. 28 of 2022.
Amendment to Article 9(3): Refunds of Overpaid Tax
Federal Decree-Law No. 17 of 2025 replaces Article 9(3) of Federal Decree-Law No. 28 of 2022 with a new rule establishing a five-year deadline for refunding overpaid tax. Where the Federal Tax Authority determines that an amount paid exceeds the amount due, the excess may be refunded only if the taxpayer submits a request within five years from the end of the relevant tax period. Under the previous framework, there was no statutory limitation on such refund claims. By introducing a clear time limit, the amendment strengthens certainty and curtails exposure to long-standing refund requests.
Amendment to Article 10(5): Correction of Nil Impact Errors
The amendment to Article 10(5) Federal Decree-Law No. 28 of 2022 shifts responsibility for correcting nil impact errors from taxpayers to the Federal Tax Authority. Under the previous version of Federal Decree-Law No. 28 of 2022, a taxpayer was required to submit a Voluntary Disclosure even where an error had no effect on the payable tax. The new text enables the Federal Tax Authority to correct such errors by notifying the taxpayer or issuing an amended return. This reform reduces unnecessary administrative burdens, limits exposure to penalties for inconsequential mistakes and aligns the law with international practices that distinguish substantive errors from formal inaccuracies.
Replacement of Article 38: Refund of Credit Balances
Federal Decree-Law No. 17 of 2025 replaces the text of Article 38 Federal Decree-Law No. 28 of 2022 setting out a strict five-year limitation period for refunding credit balances. A taxpayer may request a refund of a credit balance only if the request is submitted within five years from the end of the tax period to which the balance relates. If the request is not submitted within this period, the balance is forfeited. Previously, credit balances could remain on a taxpayer’s account without statutory expiry. The new rule therefore requires more active internal oversight of tax account reconciliations and credit management.
Replacement of Article 46: Revised Limitation Periods
The new Article 46 significantly simplifies the limitation regime and replaces the more complex structure previously contained in Federal Decree-Law No. 28 of 2022. The Federal Tax Authority may not conduct audits or issue assessments after five years from the end of the relevant tax period except in specified cases, including fraud or tax evasion, for which the limitation period extends to fifteen years. This amendment removes the prior extension mechanisms linked to audit notifications, voluntary disclosures submitted in the fifth year and interruption of limitation periods under the Civil Transactions Law. The result is a clearer, more predictable framework governing tax assessments and audits.
Introduction of New Article 54 BIS: Implementation and Guidance
Article 2 of Federal Decree-Law No. 17 of 2025 introduces a new Article 54 BIS to Federal Decree-Law No. 28 of 2022 granting the Federal Tax Authority explicit authority to issue decisions for implementing the law and to provide guidance on compliance. Although the Federal Tax Authority has long issued public clarifications and administrative guidance, the new article provides formal statutory grounding for these instruments. However, Article 54 BIS does not define the legal status or binding effect of such guidance. It remains unclear whether guidance issued under Article 54 BIS will be treated as persuasive explanatory material or whether it may give rise to legitimate expectations or be relied upon in disputes. The absence of explicit language on the interpretive hierarchy of guidance suggests that its role will ultimately be shaped through litigation and administrative practice.
Transitional Provisions
Article 3 of Federal Decree-Law No. 17 of 2025 sets out transitional rules governing how the new limitation periods and refund deadlines apply to previous tax periods. These provisions seek to ensure that taxpayers are not unfairly deprived of rights accrued under the previous framework while also allowing the Federal Tax Authority to transition existing tax positions into the revised regime. The transitional rules will be particularly important for refund claims and credit balances originating prior to the amendments.
Repeal of Article 25 BIS of Federal Decree-Law No. 7 of 2017 on Excise Tax
Article 4 of Federal Decree-Law No. 17 of 2025 repeals Article 25 BIS of Federal Decree-Law No. 7 of 2017. Article 25 BIS of the Excise Tax Law contained the statute of limitation applicable to excise tax audits and assessments. Its repeal removes the separate limitation framework from the Excise Tax Law and consolidates all limitation rules under the amended Article 46 of Federal Decree-Law No. 28 of 2022. This change is significant because it further strengthens the clarity on the limitation regime introduced with the amendment of Article 46 as referenced above.
Broader Implications for the Future Development of the UAE Tax System
The amendments introduced by Federal Decree-Law No. 17 of 2025 carry wider consequences for the trajectory of the UAE’s tax administration regime. The statutory basis for Federal Tax Authority guidance under Article 54 BIS is likely to shape the interpretive landscape of federal taxes, as courts will eventually need to consider the weight and legal effect of such guidance and the extent to which taxpayers may rely upon it. This development may elevate the relevance of legitimate expectation arguments in administrative disputes, particularly where taxpayers have acted consistently with published guidance that is later interpreted differently by the Federal Tax Authority.
The simplified limitation model will also influence audit strategy, especially under corporate tax, where complex transfer pricing, financing and cross border arrangements often require extensive analysis. Without the former extension mechanisms, the Federal Tax Authority may need to adopt earlier, more proactive and data driven audit approaches to ensure adequate review within the five-year period. Businesses may need to reassess document retention practices and internal compliance controls to ensure that their audit readiness aligns with the shortened limitation window.
The introduction of forfeiture for unused credit balances will also affect compliance behaviour. This is expected to encourage more active reconciliation of tax positions, earlier submission of refund requests and closer engagement with the Federal Tax Authority. Collectively, these developments indicate that the amendments modernise the existing procedural framework and lay the foundation for a more predictable, responsive and administratively sophisticated tax environment.
Conclusion
Federal Decree-Law No. 17 of 2025 materially reshapes the procedural rules governing the UAE tax system. The amendments introduce clearer rights and obligations, modernise the limitation and refund framework, formalise the Federal Tax Authority’s guidance function and complete the transition away from the 2017 procedural regime. Businesses should update their compliance systems, review historic refund positions and ensure preparedness for the five-year limitation period applying from 2026 onward. The reforms signal the continued maturation of the UAE’s tax administration framework and its alignment with international standards.
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