The UAE approved amendments to corporate tax, VAT, and company laws, clarifying tax credits, easing VAT rules, and updating corporate structures/Representative Image
The UAE has introduced a set of significant legislative changes covering corporate tax, value added tax (VAT), and the Commercial Companies Law. These amendments aim to make business operations simpler, reduce regulatory ambiguities, and strengthen the country’s business friendly framework, giving companies clearer guidance on taxation and corporate structures.The corporate tax amendments provide detailed guidance on calculating and settling tax liabilities when credits, incentives, or reliefs apply. Liabilities will be settled in a specific order: first, withholding tax credits; then, foreign tax credits; followed by any other Cabinet approved incentives or reliefs. Any remaining corporate tax must be paid. Taxpayers are also allowed to claim payments for unused tax credits, provided they adhere to specified timelines and procedures. These measures remove previous uncertainties and ensure consistent and transparent application of the corporate tax framework, which applies a standard 9 percent rate to companies with profits above Dh375,000 ($102,110), while profits below this threshold remain tax free.On the VAT side, Federal Decree Law No. 16 of 2025, effective January 1, 2026, simplifies tax procedures while maintaining compliance with international standards. Businesses will no longer need to issue self-invoices under the reverse charge mechanism if supporting documentation is kept. In addition, a five-year time limit is introduced for submitting claims to recover excess refundable VAT after reconciliation, providing clear timelines for businesses to manage tax recoveries.The amendments to the Commercial Companies Law expand flexibility and competitiveness in corporate structures. The law introduces the non-profit company, allowing organizations to reinvest net profits to achieve their objectives without distributing profits to shareholders. It also permits more complex capital structures, including multiple classes of shares with different rights for voting, profit distribution, redemption, and liquidation, as outlined in a company’s articles of incorporation or bylaws.Together, these updates reinforce the UAE’s commitment to creating a transparent, efficient, and predictable regulatory environment. By clarifying tax procedures, streamlining compliance, and enabling more flexible corporate structures, the country strengthens its position as a preferred destination for businesses and investors alike.
