UAE Introduces Key Amendments to Corporate Tax Law, Enhancing Clarity on Tax Credits and Settlements.
The UAE government has issued a Federal Decree-Law amending key provisions of the Corporate Tax Law, providing greater clarity on how corporate tax liabilities are calculated, offset, and settled when tax credits, incentives, and reliefs apply.
The amendments relate to Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses and are designed to enhance transparency, administrative efficiency, and certainty for taxable persons operating within the UAE’s corporate tax framework.
Clearer Order for Settling Corporate Tax Liabilities
Under the revised provisions, the decree formally clarifies the order in which corporate tax liabilities must be settled, ensuring a consistent and transparent process:
- Withholding Tax Credits
Corporate tax due must first be offset against any available withholding tax credit balance owed to the taxable person, in accordance with Article 46 of the law. - Foreign Tax Credits
Where a tax liability remains, foreign tax credits may then be applied, as outlined under Article 47. - Approved Incentives and Reliefs
Any remaining corporate tax liability may be settled using other incentives or reliefs, subject to approval by the Cabinet following a proposal from the Minister. - Final Settlement of Outstanding Tax
Where tax remains payable after all applicable credits and incentives have been exhausted, the balance must be settled in accordance with Article 48 of the Corporate Tax Law.
Introduction of Refunds for Unutilized Tax Credits
A newly introduced article also enables taxable persons, in certain cases, to claim payments for unutilised tax credits arising from approved incentives or reliefs. These refund claims will be subject to specific conditions, timelines, and procedural requirements, which will be set out by the Cabinet in due course.
To support this mechanism, the amendments authorise the Federal Tax Authority (FTA) to withhold amounts from corporate tax revenues, and where applicable top-up tax revenues, in order to settle approved refund claims. This process will be governed by a decision issued by the FTA’s Board of Directors.
Strengthening the UAE’s Corporate Tax Law Framework
The latest amendments are intended to:
- Enhance transparency and predictability for businesses
- Improve administrative clarity around tax credits and incentives
- Support the effective and consistent implementation of the UAE’s corporate tax regime
- Align the framework with international best practices while maintaining business competitiveness
These updates reflect the UAE’s continued commitment to refining its tax system in a manner that supports economic growth, compliance, and investor confidence.
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