The UAE has issued a fresh set of amendments to its corporate and business tax law, aimed at removing uncertainty around how companies apply tax credits and incentives when settling their corporate tax obligations. The changes were approved on December 15 and announced through official government channels.
The updated decree explains how corporate tax should be paid when multiple credits or reliefs are available and gives businesses the ability to request payments for unused tax credits, provided they meet the required conditions and deadlines. Officials say the goal is to bring clarity and consistency to the tax process.
Under the revised rules, companies must now follow a defined order when settling corporate tax. Any withholding tax credit must be used first. If a balance remains, foreign tax credits are applied next. Other government-approved incentives or reliefs can then be used, and any remaining tax must be paid in line with standard corporate tax procedures.
The amendments also introduce a mechanism allowing taxable persons to claim payments for tax credits that could not be used. These claims will be managed through specific procedures set by the authorities to ensure proper control and transparency.
Another important change allows the Federal Tax Authority to withhold amounts from corporate tax collections, and where applicable, top-up tax revenues, to settle approved claims. This step strengthens the administrative process and supports timely settlement of eligible refunds.
Tax specialists say the changes are practical in nature and do not create new tax burdens. Instead, they address a gap in the original law, which recognised tax credits and incentives but did not clearly explain the order in which they should be applied. This lack of clarity had led to different interpretations among businesses.
The UAE’s corporate tax system, introduced in 2023 with a standard rate of 9 per cent on profits above Dh375,000, continues to evolve. Authorities say ongoing refinements are part of a broader effort to ensure the tax framework works effectively in real business environments.
The latest update is expected to help companies manage their tax positions with greater confidence. Additional guidance from the Federal Tax Authority is anticipated to clarify the procedures for claiming unused tax credits in the near future.
