UAE announces major changes to corporate tax rules

The UAE government has issued a Federal Decree-Law amending key provisions of the Corporate Tax Law, introducing clearer rules on how corporate tax liabilities are calculated and settled when tax credits and incentives apply.

The amendments relate to Federal Decree-Law No. 47 of 2022 on the Taxation of Corporation and Businesses and are intended to provide greater certainty for businesses using tax credits, incentives and reliefs. They also introduce the possibility for taxable persons to claim payments for unused tax credits, subject to conditions set out by the Cabinet.

UAE updates corporate tax rules

Under the revised framework, the decree clarifies the order in which corporate tax liabilities must be settled. Tax due will first be offset using any available withholding tax credit balance owed to the taxable person, in line with Article 46 of the law. If a corporate tax balance remains, foreign tax credits under Article 47 must then be applied.

Any remaining liability may be settled using other incentives or reliefs approved by a Cabinet decision following a proposal from the Minister.

Where tax remains payable after all applicable credits and incentives have been used, the outstanding amount must be settled in accordance with Article 48 of the Corporate Tax Law.

A newly introduced article allows taxable persons, in certain cases, to claim payments in respect of unutilised tax credits arising from approved incentives or reliefs. These claims will be subject to specific conditions, timelines and procedures to be determined by the Cabinet.

The amendments also authorise the Federal Tax Authority to withhold amounts from corporate tax revenues, and where applicable top-up tax revenues, in order to settle approved refund claims. This will be done in line with a decision issued by the Authority’s board of directors.

The changes are intended to enhance transparency, improve administrative clarity and support the effective implementation of the UAE’s corporate tax regime.