UAE and Bahrain Tax Updates: June 2026, What Business Leaders Need to Know

BLOGS

July 02, 2026

A significant set of regulatory updates has landed across the UAE and Bahrain in recent weeks. Some carry immediate deadlines. Others fundamentally change how refund claims and audit timelines will work going forward. None of them are footnotes, each has a practical action attached.

Here’s your breakdown.

UAE: Major Amendments to the Tax Procedures Law

This is the most significant update in this round, and it changes the mechanics of how refunds, audits, and voluntary disclosures work across UAE tax.

Refund claims now have a hard deadline

Under the amended Article 38, refund claims for tax credit balances must generally be submitted within five years from the end of the relevant tax period. Miss that window, and the refund entitlement is permanently lost, there’s no further recourse.

There are some specific exceptions. If a credit balance arises because of an FTA decision issued after the five-year period, or within the final 90 days of that period, you have one year from the date the credit arises to submit your claim. For other credits arising after the original deadline, the window is 90 days.

The FTA is now required to formally notify taxpayers whether a refund claim has been approved, partially approved, or rejected, adding a layer of certainty that wasn’t previously guaranteed.

The practical takeaway: if your business has unclaimed input tax credits or overpayments sitting from several years back, the clock is now explicit. Review your position rather than assuming there’s no urgency.

Audit windows can now extend well beyond five years

The standard limitation period for tax audits and assessments remains five years. But several triggers now extend that window under the amended Article 46:

Submitting a refund claim in the fifth year extends the FTA’s audit period by two additional years. Submitting a voluntary disclosure in the fifth year extends it by one year. Cases involving tax evasion or failure to register remain subject to a 15-year limitation period, unchanged, but worth restating given how serious that exposure is.

There’s also a transitional rule: refund claims relating to periods older than five years (measured from 1 January 2026) are now permitted, but subject to a two-year audit period.

The practical takeaway: the timing of when you submit a refund claim or voluntary disclosure now has real consequences for how long your business remains open to audit. This isn’t purely a compliance question anymore, it’s a timing strategy question.

Excess tax credits now expire

Under the amended Article 9(3), excess input tax and overpayments must be utilised within five years. Once that period lapses, the FTA can no longer offset these balances against future liabilities, meaning unused credits may be permanently forfeited.

The practical takeaway: if your business has been carrying forward unused input tax credits without actively reviewing them, this is the update that should prompt a review. A credit balance sitting unused isn’t neutral anymore, it has a shelf life.

Voluntary disclosures are no longer always mandatory

Under the amended Article 10(5), voluntary disclosures will now only be mandatory in situations specifically prescribed by the FTA. Other errors can be corrected directly through the relevant tax return, a meaningful simplification for businesses dealing with minor or routine corrections.

This reduces administrative burden, but it shifts more judgment onto businesses to determine which errors genuinely require a formal disclosure and which can be handled through normal return correction.

The FTA can now issue binding guiding decisions

A new Article 54(bis) empowers the FTA to issue binding interpretative decisions that apply to both the Authority and taxpayers. This is a meaningful shift toward greater consistency, once the FTA issues a binding decision on a point of interpretation, both sides are bound by it going forward.

A one-year transitional window is open right now

A one-year transitional period, starting 1 January 2026, allows taxpayers to submit refund claims that would otherwise have lapsed under the new five-year rule. These claims remain subject to the extended two-year audit period, but the door that would otherwise be closed is open for this transitional year.

The practical takeaway: if your business has historical refund positions that you assumed were no longer recoverable under the old rules, this transitional window is worth checking before it closes.

UAE: Cabinet Decision No. 129, FTA Registration Details Must Be Kept Current

Cabinet Decision No. 129 of 2025 is now practically implemented, reinforcing an obligation that’s easy to overlook: taxpayers must notify the FTA of any changes to their registration information within 20 business days of the change.

This covers trade licence renewal details, business activities, changes to shareholders, managers, or directors, and changes to business address and contact information.

The penalties are real: AED 1,000 for the first violation, and AED 5,000 for any repeat violation within 24 months.

This is a low-drama, high-frequency compliance risk, the kind of thing that doesn’t get attention until a penalty notice arrives. If your business has had a director change, a trade licence renewal, or an address change in the last few months, check whether the FTA has been notified within the required window.

UAE: New Guidance on Taxation of Family Foundations

The FTA has issued CTGFF1, a dedicated guide on how Corporate Tax applies to Family Foundations.

This guidance covers the requirements to qualify as a fiscally transparent Family Foundation, how the Corporate Tax Law treats Family Foundations specifically, how the law applies to beneficiaries, and the registration and compliance obligations that apply to both Foundations and their beneficiaries.

For UAE family-owned business groups operating through a Foundation structure, or considering one, this guidance is directly relevant. Fiscal transparency status has significant implications for how income flowing through the Foundation is taxed, and the qualifying conditions need to be met precisely.

The practical takeaway: if your business operates through a Family Foundation structure, or you’re considering one as part of succession or wealth structuring, this guide should be reviewed alongside your current arrangements to confirm continued qualification.

UAE: E-Invoicing ASP Deadline, Confirmed at 30 October 2026

For businesses with annual revenue of AED 50 million or more, the deadline to appoint an Accredited Service Provider under the UAE Electronic Invoicing System is confirmed at 30 October 2026, with mandatory implementation by 1 January 2027.

This has been covered in detail in our previous updates, the key point remains the same: appointing your ASP is the starting point, not the finish line. The data readiness, systems integration, and process redesign work needs to happen between appointment and go-live.

Bahrain: Comprehensive DMTT Transfer Pricing Guidance

Bahrain’s National Bureau for Revenue has issued detailed guidance on transfer pricing under the Domestic Minimum Top-up Tax framework, introduced under Decree-Law No. 11 of 2024 and effective from September 2024.

This guidance is aligned with OECD Transfer Pricing Guidelines and is directly relevant for multinational enterprise groups with Bahrain operations.

The arm’s length principle, applied properly

All transactions between related parties, Constituent Entities, Joint Ventures, and Subsidiaries within the same MNE Group, must reflect conditions that would exist between independent parties. The underlying objective is straightforward: profits should be taxed where economic value is genuinely created and where risk is genuinely assumed.

Compliance requires a thorough functional and comparability analysis, properly documented in both local and master files, not a retrospective justification built after the fact.

Comparability analysis, the four factors that matter

To apply the arm’s length principle correctly, entities need to identify the commercial and financial relationships at play, accurately delineate the controlled transaction, and compare it against similar transactions between independent parties.

The key comparability factors are contractual terms, the functions performed and assets and risks involved, the characteristics of the goods or services, the commercial and economic circumstances, and the business strategies involved.

Five approved transfer pricing methods

The guidance confirms five approved methods: Comparable Uncontrolled Price (CUP), Resale Price Method, Cost Plus Method, Transactional Net Margin Method, and Profit Split Method.

The most appropriate method should be selected based on the specific facts of the transaction and the data available, and where CUP is equally reliable as an alternative method, it’s the preferred choice.

Documentation, local file and master file

Two distinct documentation requirements apply. The local file covers detailed information on specific controlled transactions involving Bahrain entities, business activities, transaction details, comparability analysis, the transfer pricing method selected, and supporting financial data.

The master file provides a comprehensive overview of the MNE Group’s global operations, value drivers, supply chains, intangibles, financing arrangements, and consolidated financials.

Both files must be prepared and maintained as prescribed under the Executive Regulations, not produced reactively when requested.

The practical takeaway: if your business operates as part of an MNE group with Bahrain entities, your transfer pricing policy and documentation need to genuinely reflect how the business actually operates, not a policy document that sits separately from operational reality.

Bahrain: DMTT Computation Guide

A separate, detailed guide addresses how the Domestic Minimum Top-up Tax is actually calculated for MNE groups within scope, specifically those with annual consolidated revenues of at least EUR 750 million.

The computation starts with the financial accounting income or loss of Bahrain constituent entities, followed by prescribed adjustments to arrive at GloBE income and covered taxes.

IFRS is recognised as an acceptable accounting standard for this purpose. Entities using other authorised standards, including AAOIFI, may need to adjust for material differences from IFRS where these create what’s termed a Material Competitive Distortion.

The guide introduces a structured methodology for identifying and assessing material accounting differences, including quantitative materiality thresholds linked to the scale of the Bahrain operations within the broader multinational group. Detailed guidance is also provided on consolidated financial statements, fiscal year alignment, permanent establishments, flow-through entities, and currency conversion.

The practical takeaway: if your group falls within the EUR 750 million revenue threshold and has Bahrain operations, this computation methodology needs to be built into your DMTT compliance process, not treated as a one-off calculation exercise.

UAE: Pillar Two Registrations Now Live on EmaraTax

Constituent entities of in-scope MNE groups can now register for the Qualified Domestic Minimum Top-up Tax directly through the EmaraTax portal. If your group falls within Pillar Two scope, this registration step is now operational and should be actioned.

What to Do This Month, Action Checklist

UAE businesses:
Review historical refund claims and credit balances against the new five-year limitation period, and check the one-year transitional window if older claims may apply.
Confirm your FTA registration details are current, trade licence, business activities, directors, and address, within the 20 business day requirement.
If you operate through a Family Foundation structure, review the new CTGFF1 guidance against your current arrangements.
If your revenue is above AED 50 million, confirm your e-invoicing ASP appointment timeline against the 30 October deadline.
If your group is in-scope for Pillar Two, register for DMTT via EmaraTax.

Bahrain-linked businesses:
If part of an MNE group with Bahrain operations, review your transfer pricing documentation against the new local and master file requirements.
If your group meets the EUR 750 million threshold, ensure your DMTT computation methodology aligns with the new guidance.

How Nishe Can Help

These updates span tax procedures, FTA compliance, family wealth structuring, e-invoicing, and cross-border transfer pricing. If any of them raises questions about your specific position, we’re happy to talk.

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