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1.Understand the Changes Key amendments include: Reverse Charge Simplification: No self-invoicing required; retain supporting docs. (mof.gov.ae) Five-Year Recovery Limit: Input VAT can only be claimed within 5 years from the end of the relevant tax period. (kpmg.com) Anti-Evasion Measures: FTA may deny input VAT if the supply is linked to
Last updated: February 9, 2026 The UAE’s move to a tiered volumetric excise tax for sweetened drinks is one of the most significant shifts in indirect taxation for beverage producers, importers, and distributors. Effective 1 January 2026, excise tax is calculated based on sugar content per liter, replacing the prior flat-rate model. (tax.gov.ae)
What Is the Tiered Volumetric Excise Tax? The tiered model replaces the flat-percentage excise tax with a structure where tax is determined by sugar and sweetener content per litre. (tax.gov.ae) Key objectives of the reform include: Aligning tax with product sugar content Encouraging healthier product formulations Supporting public health objectives
Last updated: February 9, 2026 As the UAE’s updated VAT rules under Federal Decree‑Law No. 16 of 2025 come into force on 1 January 2026, VAT‑registered businesses face a new compliance landscape. This article outlines five practical compliance areas where proactive action will protect your rights and reduce risk. 1.Reverse Charge Without Self‑Invoicing Under the
What is Fedral Decree-Law No. 16 of 2025? Federal Decree-Law No. (16) of 2025 updates specific provisions of the UAE VAT law originally introduced under Federal Decree-Law No. (8) of 2017. The changes are designed to: Improve administrative efficiency and VAT compliance Simplify reverse charge accounting procedures Introduce a five-year
Introduction The UAE Federal Tax Authority (FTA) has introduced guidelines on Natural Shortage of Excise Goods within Designated Zones (DZ). These rules clarify how businesses can handle unavoidable losses of Excise Goods—such as moisture loss, evaporation, or residues—without being subject to Excise Tax, provided proper procedures are followed. The guidelines
What Is the 5-Year VAT Recovery Limitation? The new law restricts excess recoverable input VAT to a maximum recovery period of five years. This means: VAT must be claimed or refunded within five years Unclaimed balances expire after this period No extensions are available once expired See our VAT audit
What Is Federal Decree-Law No. (16) of 2025? Federal Decree-Law No. (16) of 2025 amends selected provisions of Federal Decree-Law No. (8) of 2017 regulating VAT in the UAE. Key objectives of the amendment include: Enhancing VAT compliance and enforcement Preventing tax evasion and aggressive recovery practices Introducing time limitations
What Is Cabinet Decision No. (197) of 2025? The decision introduces a tiered excise calculation for sweetened beverages based on sugar content per 100ml. New tax tiers: < 5g sugar / 100ml: 0 AED (0%) 5g to < 8g sugar / 100ml: 0.79 AED per liter 8g+ sugar / 100ml:
How Reformulation Solves Excise Tax Exposure Under the tiered excise model, reformulation becomes a measurable compliance solution Reducing sugar below 5g/100ml removes excise tax liability entirely Minor formulation adjustments can move products into lower tax tiers Per-liter tax reductions scale across production volumes, improving margins When supported by documentation, reformulation
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