The UAE’s tax landscape is evolving rapidly. Since the introduction of VAT in 2018 and corporate tax in 2023, the Federal Tax Authority (FTA) and UAE government have issued a steady stream of legislative updates, ministerial decisions, and public clarifications. Staying informed about these changes is not optional — it is a compliance requirement.
Corporate Tax Amendments: What Has Changed
Small Business Relief Extension
The UAE government extended Small Business Relief eligibility for tax periods ending on or before 31 December 2026. Businesses with revenue below AED 3 million per period may elect for this relief, which treats taxable income as nil for the period.
Qualifying Free Zone Person (QFZP) Clarifications
The FTA has issued additional guidance on what constitutes “adequate substance” for free zone entities. Key clarifications relate to the definition of qualifying activities, the treatment of income from intellectual property held in free zones, and the de minimis income rule.
Transfer Pricing Updates
The UAE has aligned its transfer pricing framework more closely with OECD guidelines. Businesses with significant related-party transactions — particularly cross-border ones — should review their transfer pricing policies and documentation to ensure they meet the updated arm’s length standard.
Pillar Two (Global Minimum Tax) — UAE Status
The UAE has confirmed its intention to implement the OECD Pillar Two global minimum tax framework, which sets a 15% minimum effective tax rate for multinational enterprises with global revenues exceeding EUR 750 million. Large MNE groups operating in the UAE should be assessing their Pillar Two exposure and UAE implementation timeline.
VAT Amendments 2026
Zero-Rating Updates
The FTA has issued updated guidance on the conditions for zero-rating exports of services. Businesses providing cross-border services should review whether their arrangements qualify for zero-rating, particularly in light of clarifications on “place of supply” rules.
Input Tax Recovery for Mixed-Use Assets
Updated guidance on apportionment of input VAT for assets used for both taxable and exempt purposes has been issued. Businesses in the real estate, financial services, and healthcare sectors are most affected.
Voluntary Disclosure Penalty Reductions
The UAE Cabinet has periodically issued VAT penalty reduction resolutions. Businesses with historic compliance issues should assess whether filing a voluntary disclosure while penalty relief is available would be beneficial.
Excise Tax Amendments
The scope of UAE Excise Tax — which applies to tobacco, energy drinks, carbonated drinks, and electronic smoking devices — continues to be monitored by the FTA. Businesses in these sectors should ensure their Excise Tax registrations and returns are up to date following any rate or scope changes.
How to Stay Current with UAE Tax Changes
- Monitor the official FTA website (tax.gov.ae) for Public Clarifications and guides
- Subscribe to updates on EmaraTax for notices relevant to your registration
- Work with a qualified UAE tax advisor who tracks legislative changes on your behalf
- Conduct periodic tax health checks to identify compliance gaps
How Elysian Keeps You Compliant Through Tax Changes
Elysian Consulting Group monitors UAE tax legislation continuously and proactively advises clients when changes affect their obligations. Our services include tax law impact assessments, policy updates, voluntary disclosure assistance, and ongoing compliance management.
Stay ahead of UAE tax changes — speak to Elysian at elysianuae.com/contact/
Frequently Asked Questions
Q: Where can I find official UAE tax law updates?
The FTA publishes all legislation, Public Clarifications, and guides on tax.gov.ae. The UAE Official Gazette also publishes Cabinet and Ministerial Decisions.
Q: What is a voluntary disclosure and should I file one?
A voluntary disclosure is a formal mechanism to self-correct errors in previously filed VAT or corporate tax returns. Filing one before the FTA contacts you significantly reduces penalties. Elysian can advise on whether this is appropriate for your situation.
Q: Does Pillar Two affect my UAE business?
Pillar Two applies to MNE groups with global revenues exceeding EUR 750 million. Most UAE SMEs and mid-market businesses are not directly affected, but those in large multinational groups should seek specialist advice.
