The UAE has introduced targeted amendments to its corporate tax framework through a new Federal Decree-Law amending Federal Decree-Law No. 47 of 2022. The changes are aimed at making it clearer how corporate tax is calculated and settled where tax credits, incentives and reliefs apply.
A key change is the clarification of the order in which credits must be used. Corporate tax must now be settled in a set sequence. First withholding tax credits, then foreign tax credits, followed by any other Cabinet-approved incentives or reliefs. For businesses, this removes uncertainty and makes it easier to calculate tax liabilities, particularly for groups with cross-border operations.
The amendments also introduce a refund mechanism for unutilised tax credits arising from eligible incentives or reliefs. This may benefit businesses that are unable to fully use available credits in a particular tax period, as it could improve cash flow. However, the practical impact will depend on the conditions and procedures set out in further guidance.
In addition, the Federal Tax Authority is authorised to withhold amounts from corporate tax revenues, and where relevant top-up tax revenues, to pay approved refund claims. While this supports the refund process, businesses will be focused on how efficiently these refunds are handled in practice.
Overall, the amendments are generally helpful for businesses in Dubai, especially those with cross-border operations or access to multiple incentives. By providing clearer rules and introducing a refund option, the changes support more predictable tax planning. That said, the real benefit will depend on how smoothly the refund process works and how much additional administration is required.
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