In today’s UAE business landscape, companies continue to grow at a rapid pace, and with this growth comes the expectation of strict and consistent tax compliance. Against this backdrop, it is important to note the key developments introduced by UAE Federal Decree Law No. 28 of 2025 (“2025 Amendment”) to UAE Federal Decree Law No. 47 of 2022 on the Taxation of Corporations and Businesses (“UAE Corporate Tax Law”). The 2025 Amendment updates the mechanisms for settling corporate tax liabilities by revising Article 44 and introducing a new provision, Article 49 bis.
While the 2025 Amendment does not alter how corporate tax is calculated, it significantly strengthens the requirements governing the use and sequencing of tax credits. Revised Article 44 now expressly sets out the mandatory order in which businesses must apply their credits. Although this order was always understood in practice, the amendment removes any ambiguity by codifying the sequence: first, Withholding Tax Credits must be applied; second, Foreign Tax Credits; and third, any incentives or reliefs issued through Cabinet decisions. Only after completing these steps can the taxpayer settle the remaining balance under Article 48. This legally defined order enhances predictability and reduces uncertainty in tax settlements.
A practical illustration highlights the effect of this sequencing. If a business has AED 200,000 in Corporate Tax Payable and holds AED 50,000 in Withholding Tax Credits, AED 40,000 in Foreign Tax Credits, and AED 30,000 in incentives, it must apply these in the defined order, ultimately reducing the payable amount to AED 80,000. The Federal Tax Authority (FTA) is expected to verify adherence to this order, and improper sequencing, such as applying a Foreign Tax Credit before a Withholding Tax Credit, may attract assessments or penalties.
For this reason, 2026 becomes a crucial year for internal controls. Businesses will need to ensure that accounting systems, ERP configurations, and review procedures are updated to reflect the mandatory ordering of credits. Strong documentation and traceability will be essential for demonstrating compliance during FTA reviews.
The 2025 Amendment also introduces Article 49 bis, which marks a notable enhancement to the UAE’s tax framework. For the first time, companies may be able to receive payments for unused tax credits, subject to procedures and conditions to be issued by the Cabinet. Historically, unused credits offered no financial value once a company’s Corporate Tax Payable reached zero. Under the new mechanism, businesses may convert excess credits into payment, improving cash flow and providing a practical benefit for credits that would otherwise be stranded.
Until the Cabinet issues the detailed procedures, businesses should prepare by maintaining rigorous credit‑tracking processes and retaining all supporting evidence. This will be especially important for companies operating internationally or those that routinely accumulate multiple categories of credit.
Overall, the revised Article 44 and the introduction of Article 49 bis reflect a shift toward greater structure, transparency, and financial efficiency in the UAE’s corporate tax regime. Companies that prioritize accuracy, proper sequencing, and strong documentation in 2026 will not only ensure compliance but will be well positioned to take advantage of emerging refund opportunities once implemented.
Note: This Legal Update / Newsletter is intended for general informational purposes only and should not be construed as legal advice. It is based on laws and legal interpretations in effect as of the date of publication. Laws and regulations may change over time, and their application can vary depending on individual circumstances. Readers are strongly encouraged to seek specific legal counsel before acting on any of the information provided herein.rian and religious purpose in accordance with the law.
While the 2025 Amendment does not alter how corporate tax is calculated, it significantly strengthens the requirements governing the use and sequencing of tax credits. Revised Article 44 now expressly sets out the mandatory order in which businesses must apply their credits. Although this order was always understood in practice, the amendment removes any ambiguity by codifying the sequence: first, Withholding Tax Credits must be applied; second, Foreign Tax Credits; and third, any incentives or reliefs issued through Cabinet decisions. Only after completing these steps can the taxpayer settle the remaining balance under Article 48. This legally defined order enhances predictability and reduces uncertainty in tax settlements.
A practical illustration highlights the effect of this sequencing. If a business has AED 200,000 in Corporate Tax Payable and holds AED 50,000 in Withholding Tax Credits, AED 40,000 in Foreign Tax Credits, and AED 30,000 in incentives, it must apply these in the defined order, ultimately reducing the payable amount to AED 80,000. The Federal Tax Authority (FTA) is expected to verify adherence to this order, and improper sequencing, such as applying a Foreign Tax Credit before a Withholding Tax Credit, may attract assessments or penalties.
For this reason, 2026 becomes a crucial year for internal controls. Businesses will need to ensure that accounting systems, ERP configurations, and review procedures are updated to reflect the mandatory ordering of credits. Strong documentation and traceability will be essential for demonstrating compliance during FTA reviews.
The 2025 Amendment also introduces Article 49 bis, which marks a notable enhancement to the UAE’s tax framework. For the first time, companies may be able to receive payments for unused tax credits, subject to procedures and conditions to be issued by the Cabinet. Historically, unused credits offered no financial value once a company’s Corporate Tax Payable reached zero. Under the new mechanism, businesses may convert excess credits into payment, improving cash flow and providing a practical benefit for credits that would otherwise be stranded.
Until the Cabinet issues the detailed procedures, businesses should prepare by maintaining rigorous credit‑tracking processes and retaining all supporting evidence. This will be especially important for companies operating internationally or those that routinely accumulate multiple categories of credit.
Overall, the revised Article 44 and the introduction of Article 49 bis reflect a shift toward greater structure, transparency, and financial efficiency in the UAE’s corporate tax regime. Companies that prioritize accuracy, proper sequencing, and strong documentation in 2026 will not only ensure compliance but will be well positioned to take advantage of emerging refund opportunities once implemented.
Note: This Legal Update / Newsletter is intended for general informational purposes only and should not be construed as legal advice. It is based on laws and legal interpretations in effect as of the date of publication. Laws and regulations may change over time, and their application can vary depending on individual circumstances. Readers are strongly encouraged to seek specific legal counsel before acting on any of the information provided herein.rian and religious purpose in accordance with the law.