The UAE’s Tax Procedures Law has undergone major amendments in 2024 and 2025, and these changes reshape how every business—large or small—must maintain records, issue invoices, correct mistakes, handle audits, and claim refunds.

Whether you run an SME or manage a group of entities, these changes directly affect your accounting, VAT, and corporate tax compliance from 2026 onwards.

This blog explains the key amendments, breaks them down with practical examples, and shows exactly how to stay compliant without getting penalised.

📌 Source: Federal Decree-Law No. 28 of 2022 — Article 4

The law has been updated to explicitly require every business in the UAE to maintain complete accounting records and tax-related documentation.
The detailed rules will be defined in the Executive Regulation expected in 2026, but the obligation to maintain proper records already applies.

📘 What This Means for Your Business

You must maintain a full and proper set of accounting records, including:

• Chart of Accounts

• Sales & Purchase Invoices

• Expense Receipts

• Contracts & Agreements

• Bank Statements with reconciliation

• VAT Schedules (Input / Output)

• Corporate Tax Workings

• Payroll Records (if applicable)

• Inventory Records

• Financial Statements

❌ Not accepted as valid accounting records:
WhatsApp messages, Excel-only invoices, handwritten notes, or bank statements alone.

⚠️ Why This Amendment Matters

If you cannot produce complete accounting records during a tax audit:

• The FTA may impose Administrative Penalties

• They may issue an Estimated Tax Assessment (usually higher than actual)

• Your refund claims may be rejected

Proper documentation is now essential—not optional.

📍 Practical Example

A trading company with AED 1.2M annual revenue keeps invoices only on WhatsApp and Excel.

⚠️ Once the Executive Regulation is in force, this setup will be non-compliant.
They may face penalties even if the tax filing was correct, simply because the underlying records are incomplete.

📌 Source: Article 4 bis (New) – Federal Decree-Law No. 28 of 2022

The UAE has formally introduced the Electronic Invoicing System (EIS).
The Minister will announce the detailed rules, technical standards, and mandatory implementation dates.

📅 Expected Timeline

• ✔️ 2026 → EIS rollout begins

• ✔️ 2027 → Mandatory for all businesses over a turnover threshold

📘 What Will Change?

Businesses will no longer be able to issue:

• Manual invoices

• Word or Excel invoices

• Handwritten receipts

• WhatsApp-generated invoices

All invoices must:

• Be generated through an approved e-invoicing system

• Follow a structured electronic format

• Be transmitted digitally to the FTA

⚠️ Why the UAE Is Implementing E-Invoicing

• Prevent VAT fraud

• Enable real-time invoice validation

• Improve refund accuracy

• Align with global systems (KSA, India, EU)

📍 Practical Example

Today:
A company issues PDF invoices → Accepted.

From 2027 onwards:
The company must issue e-invoices through a compliant EIS system, otherwise they risk:

• Invalid invoices

• VAT not recoverable

• Penalties

• Higher audit exposure

📌 Mandatory FTA Notifications — Within 20 Business Days

Businesses must inform the FTA within 20 business days when any key business information changes.
Failure to notify can lead to penalties and communication issues with the authority.

📘 You Must Notify the FTA When There Is a Change In:

• Address / Location

• Trade License Details

• Business Activity

• Authorised Signatory

• Bank Account Details

• Ceasing or Closing the Business

📍 Practical Example

A company shifted its office from DSO to Business Bay 8 months ago but did not update the FTA.

Risks:

• All FTA notices go to the old address

• Penalties for failing to update details

• Inability to defend against assessments because the FTA considers you “notified”

📌 Source: Article 10 (Amended in 2025) — Federal Decree-Law No. 28 of 2022

The updated Article 10 clarifies when a Voluntary Disclosure (VD) must be filed and removes common misconceptions about penalties.

📘 When Must You File a Voluntary Disclosure?

You must file a VD if:

• VAT payable was understated

• Corporate Tax payable was understated

• A refund amount was overstated

You may file a VD for:

• VAT classification errors

• Incorrect disclosures with no tax impact

❗ You cannot “fix it in the next return” unless the FTA specifically allows that correction for that error type.

⏳ 5-Year Rule

You have 5 years from the end of the tax period to file a Voluntary Disclosure.

⚠️ Penalty Myth

❌ There is NO flat AED 500 penalty for VDs.

Actual penalties depend on:

• How much time has passed

• The amount of tax impacted

• Whether the FTA identified the error before you disclosed it

📍 Example with Numbers

A company underpaid VAT by AED 10,000 for March 2024 and discovers the error in 2025:

• A VD must be filed

• Late payment penalties will apply

• The longer the delay, the higher the penalty

📌 Source: Article 38 (Amended in 2025) — Federal Decree-Law No. 28 of 2022

The 2025 amendment to Article 38 introduces new timelines and transitional rules for VAT refund applications, especially for old unclaimed balances.

📘 Refund Application Timelines

A refund application must be submitted:

• Within 5 years from the end of the tax period in which the refundable balance arose

• If the refund relates to an FTA decision issued in the last 90 days, an extension applies

• For old balances before 2026, a special one-year window is available
  (Transitional rule effective from 1 January 2026)

📍 Example

A company has a VAT credit balance of AED 50,000 from 2018.

• Normally, this balance would be expired

• BUT, under the 2025 amendment, the company has a one-year window starting 1 January 2026 to claim or utilise this old balance

📌 FTA Audit Powers — What the Authority Can Legally Do

The law clearly defines the powers granted to the Federal Tax Authority (FTA) when conducting audits or investigations. Businesses must be aware of these powers to remain compliant and avoid unexpected issues.

📘 The FTA Can:

• Conduct tax audits during normal business hours

• Enter business premises with 10 business days’ notice

• Enter premises without notice if tax evasion is suspected

• Take samples of goods or records

• Seize documents, records, or equipment

• Reopen previous audits if new information emerges

📌 One of the Most Important Articles — Statute of Limitations (Audit Time Limits)

The law sets clear limits on how long the FTA can audit or assess a taxpayer — but several exceptions extend these timelines significantly.

📘 Standard Rule

The FTA cannot audit or issue an assessment after 5 years from the end of the tax period.

⚠️ Important Exceptions

The 5-year limit can be extended in the following situations:

1️⃣ If you were notified of an audit
→ FTA gets an additional 4 years

2️⃣ If the audit relates to a VD filed in the 5th year
→ FTA gets 1 extra year

3️⃣ If the audit relates to a refund application
→ FTA gets 2 extra years

4️⃣ In case of Tax Evasion
→ FTA has 15 years

5️⃣ If you failed to register for tax
→ FTA has 15 years

📌 What Your Business Must Prepare for — Starting Now

The recent amendments make it clear that the UAE is moving toward stricter compliance, real-time monitoring, and enhanced audit capability. Businesses must proactively upgrade their systems and processes.

📘 You Must Prepare Now For:

• Mandatory record-keeping controls

• E-invoicing adoption and system readiness

• Accurate and timely Voluntary Disclosures (VDs)

• Proper refund documentation and tracking

• Updating addresses & business information within 20 business days

• Stronger internal processes for audit readiness

⚠️ What This Means

The FTA is clearly moving toward:

• Real-time auditing

• AI-driven risk assessments

• Zero tolerance for missing, incomplete, or informal records

Fastlane specialises in UAE Corporate Tax, VAT, Record-Keeping, Payroll Compliance, and Full Accounting Support.
Here’s how our team ensures your business stays fully compliant with the latest FTA requirements:

1️⃣ E-Invoicing System Setup (2026–2027)

• Selecting the right e-invoicing software

• Integration with your existing accounting system

• Training your team on usage

• Ensuring 100% compliance with FTA e-invoicing rules

2️⃣ Record-Keeping & Compliance Setup

We build your full accounting compliance framework:

• Chart of Accounts setup

• Monthly bookkeeping

• Audit-ready documentation

• Corporate Tax workings

• VAT schedules

• Digital archive & document control

3️⃣ Voluntary Disclosure (VD) Filing Assistance

• Assessing the error and tax impact

• Calculating penalties

• Preparing VD forms

• Submission through EmaraTax

• Responding to FTA queries

4️⃣ FTA Audit Support & Representation

• Preparing audit files

• Responding to FTA information requests

• Communicating with FTA auditors

• Handling assessments and objections

5️⃣ Refund Application & Follow-Up

• Preparing refund documentation

• Submitting refund requests

• Managing refund verification

• Ensuring compliance with Article 38 timelines

6️⃣ Corporate Tax Compliance

• CT registration

• CT return filing

• Tax planning strategies

• Related-party disclosures

• Compliance calendar & deadline management