UAE tax rules changes 2025 bring major implications for businesses across all sectors. Understanding these modifications matters now more than ever.

Breaking: Federal Decree-Law No. 17 of 2025 Transforms Tax Procedures

The Ministry of Finance just issued Federal Decree-Law No. 17 of 2025. This law amends previous tax procedures. It takes effect on January 1, 2026.

The amendments establish clearer legal frameworks for tax obligations. Taxpayers now have five years from the relevant tax period to request refunds of credit balances from the Federal Tax Authority or use them to settle tax liabilities.

This represents a significant shift. Previously, the timeframe remained unclear. Now businesses gain certainty about their refund rights.

The FTA can conduct audits or issue assessments after the five-year period expires in certain cases, such as refund requests submitted in the final year. This balances taxpayer rights with state financial entitlements.

Key transitional provisions: Taxpayers whose credit balances expired before January 1, 2026, or will expire within one year from that date can submit refund requests within one year from January 1, 2026.

Corporate Tax: The 15% Domestic Minimum Top-Up Tax Arrives

The most substantial UAE tax rules changes involve corporate taxation. The UAE implemented a 15% Domestic Minimum Top-Up Tax starting January 1, 2025, targeting large multinational enterprises with consolidated global revenues exceeding EUR 750 million in at least two of the past four financial years.

This aligns with OECD’s Pillar Two global framework. It prevents profit shifting and ensures fair taxation.

Who Pays the 15% DMTT?

Multinational enterprises with revenues exceeding EUR 750 million now face a 15% minimum effective tax rate in the UAE. This applies when the effective tax rate falls below 15%.

The standard 9% corporate tax continues for other businesses. A baseline tax rate of 9% applies to taxable profits exceeding AED 375,000.

Free zone businesses still access 0% rates. However, strict conditions apply. Free zone businesses can qualify for a 0% corporate tax rate, but income generated from transactions with mainland UAE could be subject to the 9% tax rate.

Small Business Relief: Critical Deadline Approaching

Small businesses receive temporary relief under current UAE tax rules changes. The Small Business Relief scheme allows eligible businesses with revenue of AED 3 million or less to operate with zero corporate tax liability until December 31, 2026.

Registration Deadline You Cannot Miss

Freelancers, sole proprietors, and individuals earning over AED 1 million annually from business activities must register for corporate tax by March 31, 2025, or face a penalty of AED 10,000.

This deadline approaches fast. Non-compliance carries significant financial consequences.

Understanding the AED 3 Million Threshold

The relief operates simply. Businesses must be UAE resident and have revenue of AED 3 million or less in any of the years 2024, 2025, or 2026.

Once revenue exceeds AED 3 million in any tax period, the business becomes permanently ineligible for future relief with no opportunity to re-qualify.

This creates a critical decision point for growing businesses.

Investment Funds Get New Tax Framework

Recent UAE tax rules changes introduce updated provisions for investment vehicles. Cabinet Decision No. 34 of 2025 introduces significant updates to the corporate tax framework for Qualifying Investment Funds and Qualifying Limited Partnerships, replacing Cabinet Decision No. 81 of 2023.

If a breach of ownership diversity occurs, only the investor responsible for the breach will lose the tax exemption on their share of income while the fund itself retains its QIF status.

This individual accountability approach protects compliant investors. It prevents collective punishment.

VAT Updates: E-Invoicing Mandate Coming July 2026

Value Added Tax regulations continue evolving. The standard 5% rate remains unchanged. However, compliance requirements tighten considerably.

Mandatory E-Invoicing Framework

The UAE’s mandatory Electronic Invoicing framework amendments became effective from September 29, 2025, with full rollout in July 2026.

Simplified tax invoice formats will no longer be allowed for businesses covered under the UAE e-Invoicing scope, and all invoices must now be issued as full tax invoices, even for small-value supplies under AED 10,000.

This eliminates previous flexibility. Every transaction needs proper documentation.

Zero-rated supplies now require full tax invoices, and current FTA-approved administrative exceptions for exemptions from issuing invoices or credit notes will cease once e-invoicing applies.

What Businesses Must Do Now

Start preparing immediately. Businesses must assess their current Order to Cash process, billing systems and finance processes, and ensure customer master data is accurate and complete.

The transition window closes rapidly. Systems need upgrading before mandatory compliance.

Transfer Pricing: Stricter Documentation Requirements

Another critical area of UAE tax rules changes involves transfer pricing. Multinational Enterprise groups with consolidated global revenues exceeding AED 3.15 billion must submit a Master File and Local File in accordance with OECD-aligned transfer pricing principles.

Intercompany transactions face increased scrutiny. The UAE tax rule reforms require businesses to maintain audited financial statements compliant with International Financial Reporting Standards for taxable entities filing corporate tax returns whose turnover exceeds AED 50 million.

General Anti-Abuse Rules Strengthened

The Federal Tax Authority continues strengthening enforcement mechanisms. GAAR permits the FTA to recharacterize or disregard transactions entered into with the main purpose of obtaining tax benefits without a valid business rationale.

Common targeted activities include dividing business activities artificially to qualify for small business relief.

Substance over form matters more than ever. Tax planning must demonstrate genuine commercial purpose.

Tax Residency: The 90-Day Rule for Individuals

Individual taxation receives attention in recent UAE tax rules changes. Individuals may be classified as UAE tax residents under two tests: presence in the UAE for 183 days within any rolling 12-month period, or meeting specific criteria including presence for 90 days with additional conditions.

The 90-day rule proves particularly valuable for globally mobile founders, fund managers and high net worth individuals who split their time between tax jurisdictions.

The Tax Residency Certificate becomes essential documentation. It provides access to treaty benefits and recognition under international reporting standards.

Compliance Penalties: What You Risk

Non-compliance with UAE tax rules changes carries serious consequences. Registration penalties reach AED 10,000 for missed deadlines.

Late filing penalties accumulate monthly. Administrative penalties apply across VAT, excise tax, and corporate tax uniformly.

The FTA demonstrates increasing sophistication in enforcement. Technology enables better detection of non-compliance.

Action Steps for Your Business

Navigate these UAE tax rules changes effectively with these steps:

Immediate Actions:

• Review your current revenue against the AED 3 million threshold
• Register for corporate tax if you exceed AED 1 million in business income
• Assess eligibility for Small Business Relief before December 31, 2026
• Evaluate your free zone status and qualifying income calculations

System Preparations:

• Upgrade accounting systems for e-invoicing compliance
• Implement proper transfer pricing documentation processes
• Establish robust record-keeping for seven-year retention requirements
• Train finance teams on new compliance obligations

Professional Guidance:

• Consult tax advisors about your specific situation
• Review corporate structures for tax efficiency
• Assess DMTT implications if part of multinational group
• Plan for potential audits with proper documentation

Looking Ahead: More Changes Expected

The UAE tax environment continues maturing. Authorities align policies with international best practices consistently.

Research and development tax incentives may arrive in 2026. Employment tax credits receive consideration for implementation.

These UAE tax rules changes reflect the nation’s commitment to transparency and global standards. The transformation from a tax-free environment to a sophisticated tax regime progresses methodically.

Businesses succeeding in this environment combine proactive compliance with strategic planning. Understanding changes early provides competitive advantage.

UAE’s Economic Growth and Tax Implications

The UAE’s expanding economy creates diverse opportunities across sectors. Major retail projects like the upcoming Dubai Square Mall scheduled for 2028 will generate new business ventures requiring proper tax registration and VAT compliance. Luxury real estate developments including Shahrukhz by Danube, the Shah Rukh Khan-branded Dubai tower, attract investors who must understand corporate tax implications on rental income and property holding structures. Commercial destinations such as South Bay Mall in Dubai South bring retail opportunities that demand e-invoicing readiness and transfer pricing documentation for multi-location operations. Even property market shifts, exemplified by the Al Nasr Leisureland closure in Oud Metha, show how businesses must navigate tax considerations during asset transitions and restructuring. These UAE tax rules changes apply across all business activities, making compliance essential regardless of your industry or investment focus.

Conclusion

UAE tax rules changes in 2025 bring unprecedented complexity to business operations. The 15% DMTT for multinationals, updated refund procedures, stricter e-invoicing requirements, and enhanced enforcement create new compliance challenges.

Small businesses benefit from temporary relief until December 31, 2026. However, the March 31, 2025 registration deadline demands immediate attention.

Success requires staying informed, maintaining accurate records, and seeking professional guidance. The cost of non-compliance far exceeds investment in proper tax management.

The UAE maintains its business-friendly reputation while building robust tax infrastructure. Companies adapting quickly to these UAE tax rules changes position themselves for long-term success in this dynamic market.

Start preparing today. Review your tax position, upgrade systems, and ensure compliance before deadlines arrive. Your business sustainability depends on navigating these changes effectively.