Daijiworld Media Network - Dubai

Dubai, Dec 17: The UAE has implemented a comprehensive set of legislative changes covering corporate tax, value added tax (VAT), and the Commercial Companies Law, aimed at simplifying business operations, reducing regulatory ambiguities, and enhancing the country’s business-friendly environment. The amendments provide clearer guidance on taxation, compliance, and corporate structures, strengthening the UAE’s appeal to investors and enterprises.

Corporate tax changes introduce detailed rules on calculating and settling tax liabilities when credits, incentives, or reliefs apply. Liabilities are to be paid in a specific order: withholding tax credits, foreign tax credits, other Cabinet-approved incentives or reliefs, and any remaining corporate tax obligations. Taxpayers can also claim payments for unused tax credits within prescribed timelines and procedures. These updates remove previous uncertainties and ensure consistent and transparent application of the corporate tax framework. The standard 9% corporate tax continues to apply to 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 compliance while maintaining alignment with international standards. Businesses will no longer need to issue self-invoices under the reverse charge mechanism if proper supporting documentation is maintained. In addition, a five-year deadline is established for submitting claims to recover excess refundable VAT after reconciliation, providing clear timelines for managing tax recoveries.

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 objectives without distributing them to shareholders. It also permits more complex capital structures, including multiple classes of shares with varying rights related to voting, profit distribution, redemption, and liquidation, as defined in a company’s articles of incorporation or bylaws.

Together, these reforms reinforce the UAE’s commitment to a transparent, efficient, and predictable regulatory environment. By clarifying corporate tax procedures, streamlining VAT compliance, and enabling more flexible corporate structures, the country strengthens its position as a preferred destination for businesses and investors, allowing enterprises to operate with greater certainty and strategic flexibility.