FTA Decision No. 9 of 2025 – New VAT Refund Rules in the UAE

This article is for general informational purposes only and does not constitute legal or tax advice. FTA Decision No. 9 of 2025 and related VAT rules may be amended or clarified over time, always verify current requirements against the official FTA legislation page or with a registered Tax Agent before relying on the information below. Nothing in this article guarantees the outcome of any specific refund claim or audit.

In the rapidly maturing regulatory landscape of the United Arab Emirates, the Federal Tax Authority (FTA) has introduced significant refinements to tax procedural integrity. Among the most important is FTA Decision No. 9 of 2025, which forms the foundation of the 2026 framework clarifying the conditions under which the FTA may decline the refund of residual VAT amounts. The measure is designed to safeguard tax compliance, prevent fraudulent refund claims, and ensure that only substantiated, compliant tax credits are processed. It empowers the FTA to withhold refunds where taxpayers have outstanding tax returns, fail to cooperate during audits, or are suspected of tax evasion.

What You Need to Know About FTA Decision No. 9 of 2025 and VAT Refunds

For many businesses, a VAT refund claim in the UAE is a vital component of working capital. So what is FTA Decision No. 9 of 2025? Effective since 1 January 2026, it addresses "residual amounts" the balance of a refund request that undergoes further verification after the initial portion has been processed.

Under this decision, the FTA may pause or decline residual refunds if the business is subject to a tax audit. This shifts the responsibility to the taxpayer to demonstrate full compliance with UAE VAT regulations, rather than assuming a refund will be automatically processed during an audit.

Under the UAE VAT legislation, including Federal Decree-Law No. 8 of 2017 on Value Added Tax and its Executive Regulations, businesses must comply with the applicable time limits and procedural requirements for claiming input VAT. Input VAT claims should be submitted within the permitted period and supported by appropriate documentation in line with the latest VAT legislation and FTA guidance.

VAT rules, procedural requirements, Cabinet Decisions, and FTA guidance may be amended or updated from time to time. Applicable time limits and conditions for input VAT recovery should be verified against the latest official guidance and legislation before being relied on.

New UAE VAT Refund Updates: Key Changes Under FTA Decision No. 9 of 2025

The new framework introduces a more rigorous, audit-linked approach to refund management. Below is a comparison of the previous operational climate versus the current mandates under the new decision: 

UAE VAT Refund Rules

The core of FTA Decision No. 9 of 2025 lies in its six "declination conditions." When submitting a VAT refund during tax audit UAE processes, the FTA may decline the claim if:

1. Significant Liability: Audit findings indicate the business may have substantial tax liabilities.

2. Tax Evasion Suspicions:  There are reasonable grounds to suspect that a person or transaction may be connected with tax evasion. Any determination regarding tax evasion is made by the competent authorities based on the applicable legal framework, relevant facts, and supporting evidence

3. Supply Chain Integrity: Refund eligibility may be affected where the competent authority identifies risks, irregularities, or concerns within the supply chain in accordance with the applicable legal framework, relevant facts, and supporting evidence. This assessment may apply even where the taxpayer is not alleged to be the primary party responsible for any non-compliance.

4. Information Deadlines: The taxpayer fails to provide requested audit documents within the specified timeline.

5. Non-Cooperation: The business fails to cooperate with the FTA regarding its legal obligations during the tax audit process.

How the New VAT Refund Rules Impact Your Cash Flow, Compliance, and Business Operations?

The impact of these rules is twofold: it increases the financial risk of lost liquidity and raises the administrative burden of UAE VAT compliance.

• Cash Flow Disruption: If a large VAT refund claim UAE is declined or paused due to a VAT refund audit UAE, it creates an immediate cash flow gap.

• Supplier Vigilance: Businesses should implement reasonable supplier verification and compliance procedures as part of sound tax governance practices. Where input VAT claims or refund applications are reviewed by the Federal Tax Authority (FTA), the taxpayer may be required to provide supporting documentation and demonstrate compliance with applicable VAT requirements. Maintaining proper supplier records, conducting appropriate due diligence, and assessing potential compliance risks can help businesses strengthen their VAT recovery position and mitigate tax risks. 

• Audit Readiness: "Clean" accounting is no longer optional. With the FTA’s heightened power to deny refunds due to missing or delayed information, maintaining an audit-ready digital archive is a commercial necessity.

Key VAT Refund Compliance Requirements Under FTA Decision No. 9 of 2025

While FTA Decision No. 9 of 2025 introduces stricter conditions for VAT refund claims, it also provides businesses with a clearer understanding of the FTA's expectations. Key takeaways include:

• Clearer Compliance Standards- The decision defines specific circumstances under which VAT refund requests may be rejected or suspended, reducing ambiguity for taxpayers.

• Timely VAT Filings Matter- Businesses must ensure VAT returns are submitted accurately and within the prescribed deadlines to avoid complications during the refund process.

• Enhanced Supplier Due Diligence- Companies should verify the legitimacy and compliance status of their suppliers, as supply-chain irregularities may affect refund eligibility.

• Stronger Documentation Requirements- Maintaining complete, accurate, and easily accessible records is essential for supporting VAT refund claims and responding to FTA requests.

• Greater Predictability- By outlining clear rules and expectations, the FTA has created a more transparent framework for businesses seeking VAT refunds.

• Reduced Risk of Delays- Businesses that follow the prescribed compliance requirements are less likely to face refund rejections, suspensions, or extended reviews.

• Encouragement of Proactive Compliance- The decision reinforces the importance of robust accounting systems, internal controls, and regular compliance reviews.

By meeting these requirements, businesses can continue to benefit from the FTA's streamlined digital VAT refund process while minimizing regulatory and financial risks.

Simplify the Refund Process with Certified Tax Consultants at AMCA Auditing

Navigating the nuances of FTA Decision No. 9 of 2025 requires more than just basic bookkeeping. At AMCA Auditing, we specialize in helping businesses safeguard the tax position. Our experts provide:

• Audit Defense Strategy: We manage the interaction with the FTA, ensuring all information requests are answered accurately and on time to prevent refund declines.

• Supplier Due Diligence: We assist in vetting your supply chain to protect your input tax recovery position.

• Compliance Health Checks: Identifying gaps in your UAE VAT compliance before they become red flags during an FTA audit and VAT refund claims review.

• Dispute Resolution: If a refund is paused, we provide the technical expertise to resolve FTA inquiries efficiently.

Don't let regulatory changes disrupt your financial stability. Partner with AMCA Auditing to ensure your refund requests are robust, compliant, and audit ready.

Talk to an AMCA tax consultant →

Conclusion

FTA Decision No. 9 of 2025 and the 2026 limitation rules mark a pivotal shift. By aligning refund processing with audit integrity, the Federal Tax Authority (FTA) is incentivizing businesses to maintain high standards of record-keeping. As we move through 2026, businesses that embrace proactive tax governance rather than reactive accounting will be the ones that effectively protect their liquidity and ensure long-term fiscal health.

Secure your VAT refunds and avoid compliance risks with end-to-end support from AMCA Auditing’s tax experts. Reach out to us at-

+971 4 240 8784| info@amcaauditing.com| www.amcaauditing.com

FAQs

1. Does FTA Decision No. 9 of 2025 apply to all tax refunds?

No, it specifically applies to the "residual amounts" of VAT refund requests when a business is subject to a Tax Audit. The application of FTA Decision No. 9 of 2025 should be considered in accordance with its specific scope, definitions, and applicable procedures. Businesses should assess whether the decision applies based on the relevant tax type, circumstances of the case, and any related audit or compliance proceedings. 

2. Can the FTA decline a refund without notifying me?

The Federal Tax Authority (FTA) will generally follow the procedures prescribed under the UAE Tax Procedures Law, applicable regulations, and relevant administrative requirements when reviewing and processing refund applications. Where a taxpayer fails to respond to information requests, provide required documentation, or cooperate with the review process, the outcome of the refund application may be affected in accordance with the applicable legal framework.

Businesses should ensure that they respond promptly to FTA communications, maintain adequate supporting records, and comply with all procedural requirements during any refund review or audit process.

3. What should I do if my VAT refund is paused due to an audit?

Businesses should promptly review their compliance position, ensure that any outstanding tax returns or required submissions are completed, and provide the information or documentation requested by the Federal Tax Authority (FTA) within the specified timelines.

Engaging a qualified Tax Agent may assist businesses in managing compliance obligations, preparing audit responses, and communicating with the FTA where appropriate. However, the involvement of a Tax Agent does not guarantee approval of a VAT refund claim, as the outcome remains subject to the FTA’s assessment of the facts, supporting documentation, and compliance with the applicable UAE tax legislation and procedures. 

4. How can I protect my VAT refunds from "supply-chain" tax evasion?

Implement a robust supplier due diligence process. Regularly verify the Tax Registration Number (TRN) of your vendors, maintain copies of tax invoices, and ensure that your contracts include clauses regarding VAT compliance UAE to demonstrate that you took reasonable steps to verify supplier integrity.

5. Is the five-year limitation period related to this decision?

Yes, they are part of the same 2026 compliance framework. While FTA Decision No. 9 of 2025 focuses on audit-related refund declines, the new five-year rule (introduced in the same 2026 VAT Law amendments) dictates that any unclaimed VAT credits must be claimed within five years, or they will be permanently forfeited.