UAE Legal News
A new FTA rule puts the burden on you to check the other side before you reclaim a dirham of input tax.
Reclaiming input VAT has always required a valid tax invoice. From 1 October 2026 the Federal Tax Authority goes a step further and asks you to prove you checked who you were dealing with.
FTA Decision No. 13 of 2026 requires VAT-registered businesses to verify both the supplier and the supply before deducting input tax. In practice that means satisfying yourself that the supplier is genuine and properly registered, and that the goods or services were really provided, before you treat the VAT on that invoice as recoverable. The measure is part of a wider tightening of VAT compliance landing on the same day as amendments to the VAT Executive Regulation.
The mechanism matters because input VAT is money back in your pocket. If the FTA later finds the deduction rested on an unverified supplier or an unsubstantiated supply, it can deny the credit and raise the tax due, with penalties on top.
Add a supplier-verification step to your accounts-payable workflow before 1 October: confirm the supplier's tax registration number and retain proof the supply took place. Treat any invoice from an unverifiable supplier as high-risk and park the input-VAT claim until you can substantiate it. A few minutes of checking now protects the deduction later.
Cash payments, staff housing and composite supplies all get new VAT treatment this week.
The VAT Executive Regulation is the detailed rulebook sitting under the VAT Law, and a batch of amendments under Cabinet Decision No. 149 of 2026 lands on 1 October 2026.
The changes are wide-ranging. Input VAT will no longer be recoverable on cash-paid purchases above a threshold the Minister is still to set, which pushes businesses toward traceable payment methods. Staff accommodation is moved out of the mandatory-benefits exception unless MoHRE requires it, affecting employers who house their workers. The amendments also rework composite supplies, medical products and the Capital Assets Scheme, while a new input-tax apportionment ratio only applies from the first tax year after 1 October 2027.
For business owners the practical point is that several everyday VAT positions - how you pay suppliers, how you treat staff housing, how you invoice bundled offerings - may need revisiting so you don't quietly lose recoverable VAT or misstate what you owe.
Sit down with whoever handles your VAT and map the amended areas against how you actually operate - especially cash payments and staff accommodation. Shift large supplier payments onto traceable channels so you keep the input-VAT credit. Flag the 2027/2028 apportionment change now if you are a partially exempt business, so it doesn't surprise you later.
A new procedure lengthens the exemption application window and lets some companies catch up on periods already closed.
Exemption from UAE Corporate Tax isn't automatic - eligible entities have to apply, and the clock matters. FTA Decision No. 15 of 2026, published on 15 September 2026, overhauls how that application works.
The decision replaces the 2023 procedure and lengthens the window to 90 business days after the tax period ends, giving eligible businesses more breathing room. Importantly, it also reopens periods that have already passed. A UAE company wholly owned and controlled by a government entity can apply for exemption for any tax period that ended before 1 January 2026, provided it met the conditions, by 31 October 2026. Two further catch-ups - for foreign companies owned by exempt owners and for qualifying limited partnerships - run to 31 December 2026.
For directors of eligible entities, this is a rare second chance: a structured route to claim an exemption that might otherwise have been lost to a missed deadline.
Work out whether your entity is exemption-eligible and which catch-up category, if any, applies to it. If you are a government-owned or government-controlled company with closed pre-2026 periods, treat 31 October 2026 as a hard deadline and start the application now. Other eligible structures have until 31 December - but don't leave it to the last week.
Smaller companies get three more years of a 0% corporate-tax path.
Small Business Relief lets eligible UAE-resident businesses with revenue of AED 3 million or less elect to be treated as having no taxable income - so they effectively pay 0% corporate tax and file a simplified return.
The relief was originally due to expire for tax periods ending after 31 December 2026. The Ministry of Finance has now extended it so it applies to tax periods ending on or before 31 December 2029, giving smaller businesses three additional years of the lighter regime. The extension affects all taxable persons within the threshold, including entrepreneurs whose revenue sits between the AED 1 million corporate-tax entry point and the AED 3 million relief ceiling.
The policy signal is deliberate: the UAE wants to keep tax light for smaller businesses in their early growth stages, rather than pulling them into full corporate-tax compliance too soon.
If your turnover is AED 3 million or less, check your eligibility each year and actively elect for Small Business Relief on your return - it is not automatic. Keep an eye on the AED 3 million ceiling as you grow, because crossing it changes your position. The relief now runs to the end of 2029, so build it into your tax planning.
The DIFC's low-cost holding-company regime is being reshaped - worth a look if you hold assets there.
The DIFC Prescribed Company is a popular, low-cost vehicle used to hold assets, structure investments and ring-fence liabilities within the Dubai International Financial Centre. The DIFC has been consulting on and advancing amendments to the Prescribed Company Regulations during 2026.
The changes refine who can set up a Prescribed Company and the governance and nexus conditions attached to it. Because these vehicles are widely used for holding shares, real estate and intellectual property, and for family and succession structuring, even modest shifts in eligibility or ongoing obligations can affect whether an existing or planned structure still fits.
For business owners, the practical question is whether your DIFC holding structure still qualifies under the updated rules and whether any new governance steps now apply.
If you already hold assets through a DIFC Prescribed Company, have your adviser check your structure against the amended regulations to confirm it remains compliant. If you are planning a new holding or SPV structure in the DIFC, factor the updated eligibility and governance rules in from the start. Don't assume last year's setup still ticks every box.
Key Dates
- 28 September 2026VAT return + payment deadline (monthly filers: August 2026 tax period; FTA EmaraTax filing)
- 30 September 2026Corporate Tax Return + payment due for financial year ending 31 December 2025 (FTA-confirmed)
- 15 October 2026Excise Tax return final filing deadline (FTA announcements page)
- 28 October 2026Q3 2026 VAT return + payment due for quarterly filers (July-September 2026 period)
- 30 October 2026E-invoicing: mandatory go-live milestone for Phase 1 taxpayers on FTA's Peppol-based network
- 31 December 2026ESR Notification + Report due for financial year ending 31 December 2025
- Rolling (within 15 days of any change)UBO register update required on any ownership or management change; annual review recommended before year-end
Fun Legal Fact
In January 1919, a storage tank in Boston burst and sent 2.3 million gallons of molasses surging through the streets at an estimated 35 mph, killing 21 people and injuring 150. The subsequent lawsuit, heard over five years with 3,000 witnesses, resulted in the tank's owner - United States Industrial Alcohol Company - being held liable under negligence principles, a notably early application of corporate liability for industrial disasters. The case quietly helped establish the idea that companies cannot simply shrug off catastrophic failures as acts of God. Apparently some legal precedents really do stick.
Roman law under the Twelve Tables (450 BC) prescribed specific punishments for specific insults, and later Republican-era sources record prosecutions for pelting officials with vegetables during public disputes - a problem apparently common enough to warrant formal legal attention. The Romans took dignitas, the personal dignity of a public official, with deadly seriousness; an affront to a magistrate could end in a fine heavier than one for minor assault. It is a reminder that the line between political protest and criminal conduct has always been drawn, and redrawn, by whoever is holding the fasces. Plus ça change.
Henry VIII introduced a beard tax in 1535, graduated by the wearer's social standing - the higher your rank, the more you paid to keep your facial hair. His son Edward VI reportedly revived it, and the idea resurfaced in various forms across Europe, most famously under Peter the Great of Russia in 1698, who issued beard tokens as proof of payment. The law is well-documented in both English and Russian historical records and stands as a genuine example of states monetising personal appearance. One wonders what a 21st-century equivalent might look like - though it is probably best not to give anyone ideas.