Businesses that pay more VAT on their costs than they collect on sales build up a credit with the Federal Tax Authority. For years, that balance could be carried forward with no time limit. The amended VAT law changed that from 1 January 2026.
The new rule in one line
Excess recoverable VAT must be used against VAT payable or claimed as a refund within five years from the end of the tax period in which it arose. After that, the right to recover it lapses and the money is gone.
The transitional deadline that matters this year
Credits from the early years of UAE VAT, whose five-year window had already passed or passes within a year of the change, fall under a transitional window. Refund requests for those older credits must be submitted by 31 December 2026. Businesses that have been carrying a balance since 2018 or 2019 are the ones at risk.
Who usually carries a VAT credit
- Exporters and other businesses making mostly zero-rated supplies
- Businesses that have invested heavily in fit-out, equipment or stock
- Construction and contracting businesses with long project cycles
- Companies that stopped trading but kept their registration open
How to check your position
Open your VAT account on EmaraTax and look at the credit balance, then work back through your returns to see which periods it came from. The age of each credit matters more than the total. If part of the balance dates from 2018 to 2021, that is the part to deal with first.
Before you submit a refund request
The FTA reviews refund claims and can ask for the invoices behind them. Input VAT has to be recoverable and supported by valid tax invoices in your name. It is worth checking the evidence before submitting, because a claim that falls apart under review costs time you may not have left.
Questions we are asked about this
How long does an FTA refund take?
The FTA reviews the request and may ask for supporting documents, which extends the timeline. Submitting a complete, well-evidenced claim is the main thing you control.
Can I use the credit instead of claiming it back?
Yes. A credit used against VAT payable in a later return is not lost. The five-year limit applies to credit that is neither used nor claimed.
What if my documents are incomplete?
Missing tax invoices are the most common reason claims fail. We review what you have before applying and tell you honestly whether the claim is worth submitting.
Need help with this? VATAXSYS, VAT and Tax Consultant, handles vat refund for businesses across the UAE. Call +971 55 240 3135 or message us on WhatsApp for a free consultation.