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August 04, 2025

July 2025 GCC Tax Update: UAE VAT Amendments, Corporate Tax Relief, Bahrain Zero-Rating Changes, and More

July 2025 GCC Tax Update: UAE VAT Amendments, Corporate Tax Relief, Bahrain Zero-Rating Changes, and More

In July 2025, the tax landscape across the UAE and Bahrain saw several important changes. From updates to the UAE’s VAT Law and Corporate Tax regime to Bahrain’s revised zero-rated VAT list for healthcare products, these developments could have a direct impact on your business.

Here’s our practical breakdown of what’s changed, what it means for you, and what you need to do next.

UAE Updates

1. VAT Law Amendments: Preparing for e-Invoicing

The Ministry of Finance published the English translation of Federal Decree-Law No. (16) of 2024, which introduces critical amendments to the UAE VAT Law (Federal Decree-Law No. 8 of 2017).

What’s changed?

  • New definitions: “Electronic Invoice,” “Electronic Tax Credit Note,” and “e-Invoicing System” have been added for clarity.
  • Clearer definition of “Non-Resident.”
  • Adjustments to input VAT recovery, refund rules, and the FTA’s administrative authority to enforce e-invoicing. 

Effective date: 30 October 2024.
Why it matters: These changes lay the foundation for the UAE’s upcoming mandatory e-invoicing regime. Businesses need to start preparing their systems now.

Read the full decree here.

2. Depreciation for Investment Properties at Fair Value

Ministerial Decision No. 173 of 2025 introduces a new tax adjustment for investment properties held at fair value.

Who does it apply to?

  • Taxpayers using the realisation basis for gains and losses on fair-valued investment properties.

Key points:

  • Depreciation can be claimed at the lower of 4% of original cost or the tax written-down value each year.
  • Any depreciation claimed must be added back when the property is sold.
  • The election is one-time and must be made in the first relevant tax period.
  • Anti-abuse measures apply for related-party transactions.

Read the full decision here.

3. AED 10,000 Corporate Tax Registration Penalty Waiver

The FTA has announced a waiver or refund of the AED 10,000 penalty for late corporate tax registration if you meet certain conditions:

Key condition:

  • File your first Corporate Tax return (or exempt declaration) within 7 months from the end of your first tax year.
  • For businesses with a 31 December 2024 year-end, this means filing by 31 July 2025.

If you meet the conditions:

  • Any unpaid penalty will be automatically waived.
  • If already paid, the amount will be credited to your EmaraTax account for offset or refund.

Read the full clarification here.

4. Updated FTA Guide on Private Clarifications

The FTA has released a new version of its guide on Private Clarifications (TPGPC1).

Key points:

  • These are signed, written responses to specific taxpayer questions.
  • Only applies to the applicant and the facts provided.
  • Must be a genuine uncertainty and not overlap with audits or existing guidance.
  • Fees: AED 1,500–2,250.
  • Response time: 60 business days (if complete).

Bahrain Updates

1. Updated Zero-Rated VAT List for Healthcare Products

Effective 1 July 2025, Bahrain’s NBR has updated the list of healthcare-related products eligible for 0% VAT.

  • Revised VAT Healthcare Guide (v1.1) adds Section 2.2 with the new product list.
  • Updated VAT General Guide (v1.13) adds Section 6.3.6 on documentation requirements.

2. DMTT Advance Payment Manual Released

Bahrain has published new guidance on Domestic Minimum Top-Up Tax (DMTT) advance payments.

  • Payments must be made quarterly.
  • A grace period allows the first two quarters to be paid together by 31 August 2025.
  • Businesses can estimate using prior-year or current-year methods.
  • Records must be retained for review.

What’s Next?

Businesses in the UAE and Bahrain should:

  • Review systems and processes for e-invoicing readiness.
  • Assess the impact of new depreciation rules.
  • File Corporate Tax returns early to avoid penalties.
  • Revisit VAT classifications and zero-rated product lists.

Need help navigating these changes?
 Contact the Nishe team we’re here to guide you through the details and keep your business compliant.

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