The United Arab Emirates has enacted significant amendments to its Federal Decree-Law on Corporate and Business Taxation, introducing substantial changes to tax credit utilization mechanisms and settlement procedures. These reforms, announced on December 15, 2025, establish a structured framework for calculating and settling corporate tax liabilities while enhancing clarity regarding incentive programs.
The revised legislation grants taxable entities the right to claim payments for unutilized tax credits derived from approved incentives and reliefs, subject to specific conditions and procedural requirements. The new provisions establish a hierarchical settlement sequence that prioritizes withholding tax credit balances under Article 46, followed by available foreign tax credits pursuant to Article 47. Subsequent utilization involves other incentive balances determined by Cabinet decisions, with any remaining liabilities settled according to Article 48 provisions.
Additionally, the amendments empower the Federal Tax Authority to withhold amounts from corporate tax revenues, including potential top-up tax collections, to facilitate approved claims settlement. This authority operates under directives issued by the Authority’s Board of Directors, creating a more streamlined and transparent tax administration system. These changes represent the UAE’s continued commitment to refining its business taxation environment while maintaining its competitive position as a global commercial hub.