UAE Amends Corporate Tax Law to Clarify Use of Tax Credits and Incentives

UAE, 15 December, 2025: The UAE has announced amendments to its corporate tax law to clarify how corporate tax liabilities are calculated and settled when tax credits, incentives, or reliefs apply. The changes aim to improve certainty and transparency for businesses.

Under the amendments, corporate tax will be settled in a defined order: first through withholding tax credits, followed by foreign tax credits, and then any other Cabinet-approved incentives or reliefs. Any remaining tax due must be paid after all credits are applied.

The decree also introduces a new provision allowing taxpayers to claim payments for unutilised tax credits, subject to specified conditions, timelines, and procedures. The Federal Tax Authority is authorised to withhold amounts from corporate tax (and any relevant top-up tax) to settle approved claims.

The UAE’s federal corporate tax applies at a standard rate of 9% to taxable profits exceeding AED 375,000, effective for financial years starting on or after 1 June 2023.