Dr. Laura Voda January 30, 2026 On 15 December 2025, the UAE issued a new Federal Decree-Law amending Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (“Corporate Tax Law”). The amendments further refine the UAE’s corporate tax framework by clarifying the treatment of tax credits, incentives, and reliefs, and by introducing a statutory basis for claiming payments in respect of unutilized tax credits. Clarified Mechanism for Corporate Tax Settlement The amendments establish a clear statutory mechanism for the calculation and settlement of corporate tax where tax credits or incentives apply. Corporate tax liabilities must now be settled in a defined sequence, providing greater legal certainty as to the order in which available credits and reliefs are to be utilized. This clarification is particularly relevant for businesses applying multiple credits or operating in cross-border contexts. Sequential Application of Tax Credits and Incentives As a first step, the corporate tax liability must be offset against any withholding tax credit balance available to the taxable person, in accordance with Article 46 of the Corporate Tax Law. This confirms the priority of withholding tax credits within the settlement process. Where a balance of corporate tax remains after the application of the withholding tax credit, the taxable person may then utilize any available foreign tax credit pursuant to Article 47. This is particularly relevant for businesses with cross-border operations that have already incurred tax in foreign jurisdictions. If a corporate tax liability still remains thereafter, the taxable person may apply any other balances or forms of tax incentives or reliefs as may be determined by a Cabinet decision issued by the Ministry of Finance in the future. This final step allows for the integration of additional incentive regimes within the statutory settlement framework. Any residual corporate tax liability remaining after all applicable credits and incentives have been utilized must be settled in accordance with Article 48 of the Corporate Tax Law. Refunds for Unutilized Tax Credits (New) A central new element of the amendment is the introduction of a new provision enabling taxable persons to claim a payment in respect of unutilized tax credits arising from approved incentives or reliefs. The availability of such refunds will be subject to specific conditions, time limits and procedural requirements to be prescribed in the future. Practical Implications for Businesses The amendments have practical implications for businesses subject to UAE corporate tax, particularly those benefiting from multiple tax credits or operating across multiple jurisdictions. The codified settlement sequence provides greater predictability in tax calculations and facilitates more accurate cash flow and tax planning. The introduction of a potential refund mechanism for unutilized tax credits may also improve liquidity for eligible businesses, especially where incentives or reliefs exceed the corporate tax payable in a tax period. At the same time, taxable persons will need to closely monitor forthcoming Cabinet decisions to assess whether their existing tax positions and incentive structures qualify under the new framework. Pending Implementing Decisions While the Decree-Law establishes the statutory framework, several key aspects of the new regime remain subject to further implementing decisions. Until this secondary legislation is issued, certain practical questions remain open, including eligibility thresholds, documentation requirements, and timing of refunds. Conclusion and Outlook The amendments to the UAE Corporate Tax Law mark a further step in the maturation of the UAE’s corporate tax regime. By clarifying the order in which tax credits and incentives are applied and by introducing a framework for the refund of unutilized tax credits, the Decree-Law enhances legal certainty and administrative clarity for taxable persons. Once supplemented by the anticipated implementing decisions, the new rules are expected to support more efficient tax compliance and improved cash flow management, reinforcing the UAE’s objective of maintaining a transparent and business-friendly corporate tax environment.
