Unclaimed VAT Credits in the UAE Expire in 2026
There may be money sitting in your EmaraTax account that disappears at the end of this year. Amended UAE VAT rules introduced a five-year limit on recovering excess VAT, and a transitional window to claim older balances closes on 31 December 2026. Businesses that have quietly carried forward unclaimed VAT credits for years are the most exposed.
This guide explains what changed, what “expiry” actually means for your cash, who is most at risk, and how to check whether you have a balance worth claiming before it lapses.
Can VAT credits expire in the UAE?
Until recently, no. A carried-forward VAT credit could sit on your account indefinitely. That changed on 1 January 2026.
Two pieces of legislation came into force on that date. Federal Decree-Law No. 16 of 2025 amended the VAT Law, and Federal Decree-Law No. 17 of 2025 amended the Tax Procedures Law. The change that matters here sits in the amended Article 74(3). Excess recoverable VAT may now be carried forward for a maximum of five years from the end of the tax period in which the excess arose.
In plain terms, a VAT credit now has a shelf life. It is no longer something you can sit on without consequence.
What is the 5-year VAT refund rule?
The rule is simple to state. If, before the end of the five-year period, the excess VAT is neither used to offset a VAT liability nor submitted as a refund request, the right to recover it lapses. Once it lapses, you can no longer use it to settle any VAT liability. The money is simply gone.
This is real cash for businesses that regularly sit in a net refund position. The five-year clock runs from the end of the tax period the credit arose in, not from when you noticed it. The oldest balances expire first.
This change is part of a wider tightening of the Tax Procedures Law that also extended the FTA’s audit reach. We cover the full set of changes in our guide to the new UAE Tax Procedures Law.
What is the 31 December 2026 transitional window?
The law gives a transitional runway. From 1 January 2026, businesses have until 31 December 2026 to submit refund claims for older credits whose five-year limitation period either already expired before 1 January 2026 or is set to expire within the following year.
The practical headline: VAT credits dating back to 2021 start expiring during 2026. If you have been carrying forward excess input VAT from those years, part of that balance may be gone by 31 December if you do nothing.
This is different from the ordinary refund-speed problem. A slow refund is money that is coming. An expired credit is money that is gone. If your refunds simply take too long to arrive, our guide on why your VAT refund is taking forever is the better starting point.
Who is most affected by the VAT credit expiry rule?
The businesses most at risk share a profile. They are in a structural refund position, they have not actively requested refunds, and they assumed a carried-forward credit was safe because it always had been.
That includes many free zone trading businesses, exporters selling zero-rated goods and services, and companies that made large capital purchases and recovered the VAT slowly. None of them did anything wrong. The rule simply changed underneath them.
How to claim before the window closes
1. Log into EmaraTax and read your VAT credit balance. Do not assume it is zero or assume it is safe. Pull the actual figure.
2. Find out how old the oldest credit is. The five-year clock runs from the end of the tax period the credit arose in. The oldest balances are the ones at risk first.
3. Submit refund claims for at-risk balances before 31 December 2026. If any part of your credit is approaching its five-year limit, the transitional window is your chance to recover it. Our piece on the critical VAT refund deadline for 2026 covers the timing.
4. Stop carrying forward by default. Treat VAT refunds as a regular cash management cycle, not an afterthought. A credit claimed is cash in the business. A credit forgotten is cash lost.
Frequently asked questions
Can VAT credits expire in the UAE?
Yes. Under the amended Article 74(3), excess recoverable VAT can be carried forward for a maximum of five years from the end of the tax period it arose in. After that, the right to recover it lapses.
What is the 5-year VAT refund rule?
From 1 January 2026, a VAT credit must be refunded or used within five years from the end of the tax period it relates to. It came in through Decree-Law 16 and 17 of 2025.
What is the 31 December 2026 transitional window?
A window running from 1 January 2026 to 31 December 2026 to claim older credits whose five-year period already expired or expires within the following year. 2021 credits start expiring in 2026.
Who is most affected?
Businesses in a net refund position, such as exporters, zero-rated suppliers, and capital-heavy businesses that carried credits forward rather than claiming refunds.
How do I check my VAT credit balance?
Log into EmaraTax, review your balance and the age of the oldest credit, and submit refund claims for at-risk balances before 31 December 2026.
A VAT credit feels like a safe number on a screen. Under the amended rules it is a clock. The businesses that check their balance this year keep their money. The ones that wait until 2027 find out the hard way. If you want help reviewing your VAT position and whether you have a refund to claim, book a clarity call here.
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