Many UAE businesses carry an excess VAT credit balance on their EmaraTax account, sometimes for years. Exporters, businesses in a heavy investment phase and companies with mostly zero-rated sales often build these balances up and simply carry them forward.
Since 1 January 2026, that approach has a time limit. If you have older balances, there is a transitional window to claim them, and it closes on 1 January 2027.
What changed
Federal Decree-Law No. 16 of 2025 (amending the VAT Law) and Federal Decree-Law No. 17 of 2025 (amending the Tax Procedures Law) took effect on 1 January 2026. Two changes matter here:
- A five-year limit on refunds. A refund of an excess input tax balance must be requested within five years from the end of the tax period in which the balance arose.
- No indefinite carry-forward. Excess recoverable tax that is not used or refunded within five years can no longer be offset or refunded.
The transitional window
Balances that had already passed the five-year mark when the law changed, or that would pass it within one year of the change, would have been lost immediately. To avoid that, the amendments allow these older balances to be claimed before 1 January 2027.
In practice, if your credit balance includes amounts from tax periods ending in 2021 or earlier, you should review them now. Those are the amounts most likely to depend on the transitional window.
What to do before the deadline
- Download your EmaraTax account statement and identify when each part of your credit balance arose.
- Separate old and recent balances. Anything from periods ending five or more years ago, or approaching that mark, is at risk.
- Check the supporting records. A refund application can trigger an FTA review. Make sure tax invoices, import declarations and export evidence for those periods are available.
- Fix known errors first. If you know an old return was wrong, consider a voluntary disclosure before or alongside the refund claim.
- File the refund application in EmaraTax in good time. Do not wait for the last week of December.
Audit exposure
The amendments also set a general five-year limit for FTA audits and assessments. If a refund is claimed late in that period, the FTA has an extended window, generally two years from the claim, to review it. Claiming a refund means the FTA will look closely at those periods, so prepare the file as if an audit will follow.
How Dreambooks helps
Dreambooks keeps every VAT return tied to the invoices and bills behind it, so you can trace each part of a credit balance back to its tax period and source documents. That makes both the refund claim and any follow-up review much faster.
Official sources
- Ministry of Finance: VAT Law amendments from January 2026
- Ministry of Finance: Tax Procedures Law amendments from 2026
- Federal Decree-Law No. 28 of 2022 on Tax Procedures, as amended (FTA)
This article is general information as of September 2026, not tax advice. Check the latest FTA guidance on refunds and transitional rules, or speak to your tax adviser, before acting.