• It has been clarified that taxpayers are not required to issue tax invoices to themselves when importing certain goods or services for their business use, thereby simplifying the compliance and administrative process.

• Under the updated UAE VAT Law, excess recoverable input tax may be carried forward for a maximum of five (5) years from the end of the tax period in which it arose, thereby establishing a statute of limitations for claiming such excess.
  
  KPMG comment:
  Businesses are encouraged to review all historical excess recoverable input tax balances and ensure that any unclaimed amounts are either utilized to offset VAT liabilities or submitted for refund within the five-year period to avoid forfeiture.
  
  
• It is further clarified that if the excess recoverable input tax is not claimed or utilized to settle tax liabilities within the five (5) year period, then the right to claim will expire. After this period, taxpayers will no longer be able to use the excess to offset VAT liabilities or request a refund.
  
  KPMG comment:
  Businesses are advised to review and ensure that all excess recoverable input tax is claimed or applied against VAT liabilities within the five-year period to prevent the expiration of the right to claim and the potential loss of recoverable VAT.

• This article now includes three new provisions addressing the recoverability of input tax in the context of tax evasion.
• Key considerations include:
  o  The tax authority will disallow input tax deductions if the supply forms part of a chain linked to tax evasion and the taxpayer was aware of this connection when claiming the deduction.
  o  The tax authority may also disallow deductions if, based on the circumstances of the supply, the taxpayer ought to have been aware of the connection to tax evasion.
  o  A taxpayer will be considered aware if they fail to verify the validity and integrity of received supplies before claiming the input tax.

Article 79 (bis) – Statute of Limitation

• It should be noted that this Article has been repealed, and any provisions that conflict with the UAE VAT Law are no longer applicable/valid.

• Previously, the tax authority could allocate overpayments or credits without any time limit. The amendment now introduces a maximum period of five (5) years from the end of the relevant tax period during which the tax authority may apply the credit or overpayment.
• If the credit or overpayment is not utilized within the five (5) year period, it may no longer be applied to outstanding tax obligations.
  
  KPMG comment:
  This aligns well with other provisions establishing statutes of limitation for VAT credits and refunds.

• The amendment of this article introduces two methods of correction:
  o  Voluntary Disclosure: Applicable only to cases specified by the tax authority.
  o  Submission of a Tax Return: Applicable to all other cases.
• Voluntary Disclosure is no longer mandatory for all errors. The tax authority may specify certain cases where it is required, while errors that are not covered by these cases can now be corrected directly through the tax return, thereby streamlining and simplifying the correction process.

• The updated Tax Procedures Law has been amended to clarify that taxpayers may submit a refund request for credit balances with the tax authority to which they are entitled under the Tax Law, provided the balance exceeds any tax due and administrative penalties.

• The updated clause sets a five (5) year deadline for refund requests, calculated from the end of the relevant tax period depending on the origin of the credit balance (i.e. overpayment, tax return/voluntary disclosure(s), or any other cases).
  
  KPMG comment:
  Taxpayers should monitor credit balances, maintain supporting documentation, and submit refund requests timely to avoid losing their right to recover VAT.

• The newly added clauses introduce specific rules regarding the submission and review of tax refund requests, particularly addressing situations where the credit balance arises after the standard five (5) year period or near to its expiry.
• Clause 3: If the credit balance results from a decision issued by the tax authority after the expiry of the standard five (5) year period or during the last 90 days of that period, the taxpayer may submit a refund request within one (1) year from the date the credit balance arose.
• Clause 4: In cases other than those covered by Clause 3, if the credit balance arises after the expiry of the five (5) year period or during the last 90 days, the taxpayer may submit a refund request within ninety (90) days from the date the credit balance arose.
• Clause 5: The tax authority is required to review refund requests submitted under this Article and notify the taxpayer of its decision, either accepting or rejecting the request.
• Clause 6: If a refund request is not submitted within the timelines specified in this Article, the taxpayer’s right to claim the refund of any overpaid tax or credit balance expires.

• The updated clause confirms that five (5) years is the default limitation period for conducting tax audits and issuing tax assessments. However, the tax authority may act beyond this timeframe in the additional exceptional cases now listed under clauses (4), (7), and (8). The expansion of these exceptions compared to earlier versions effectively broadens the tax authority’s audit powers.

• The introduction to this clause specifies an exception to the standard five (5) year limitation period. Specifically, if a taxpayer submits a refund claim in the fifth (5^th) year following the end of the relevant tax period, the tax authority may still conduct an audit or issue an assessment related to that claim.
• Any audit or assessment under this exception must be completed within two (2) years from the date the refund or credit claim was submitted.

• The updated clause reaffirms the standard five (5) year limitation for Voluntary Disclosures but introduces a specific exception for refund-related Voluntary Disclosures that are pending a decision by the tax authority.

Article 54 – (Bis)

• The updated Tax Procedures Law introduces this Article, which provides that the tax authority will issue official guidelines on the practical application of the UAE VAT Law and the Tax Procedures Law. These guidelines will specifically address tax transactions and clarify how the provisions of the Law should be applied in practice.

• The introduction of this Article clarifies that a taxpayer eligible for a tax refund or credit balance, whose five (5) year claim period has already expired or will expire within one (1) from the effective date of the Decree-Law, may request a refund or apply the balance toward tax dues or administrative penalties, provided the request is submitted within one (1) year from the Decree-Law’s effective date.
  
  KPMG comment:
  This effectively means that businesses with outstanding refund balances now have until 31 December 2026 to claim any refunds for the tax years 2018-2020.

Article 3, Clause 2 – Additional Provisions

• The general rule under Article 46(6) limits the submission of Voluntary Disclosures to five (5) years from the end of the relevant tax period. However, a new exception allows taxpayers to submit a Voluntary Disclosure for a refund application within two (2) years of filing the refund, even if the standard five (5) year period has expired. This option is not available once the tax authority has already issued its decision on the refund application.
  
  KPMG comment:
  This amendment effectively provides a time-bound opportunity for taxpayers to correct the periods with outstanding refund applications beyond the usual Voluntary Disclosure timeframe.

• The introduction of this article clarifies that the tax authority may conduct a tax audit or issue a tax assessment in relation to a tax refund or credit balance application submitted with the tax authority, even if it falls outside the five (5) year time limit, provided that the tax audit or tax assessment is completed within two (2) years from the application submission date.