Declining Tax Refunds: FTA Decision No. 9/2025

There will be major changes in tax refund claims based on remaining tax credits. The new rule highlights the change using Decision No. 9 of 2025. This new rule will be applicable starting January 1, 2026. The change in the rule will be applicable for VAT, corporate tax, and excise duty.

We are taking these measures to ensure adherence to the rules, enhance the credibility of audits, and prevent fraudulent refund claims. Let’s discuss the important rules that will turn down the refund claims based on the decision.

What Are the Key Conditions for Declining Tax Refund Requests Under FTA Decision No. 9 of 2025?

Once the taxable person makes the request, the Authority will decline or withhold any refund or residual amount. He should be going under tax audit at the moment. The FTA Decision No. 9 of 2025 rule stipulates that the following conditions must be satisfied.

• Potential for significant tax liability

FTA can decline the refund if there is sufficient evidence that suggests significant additional tax liability. This could increase based on the information obtained during the tax audit. Sadly, the refunds won’t be issued whereby future tax liabilities are unresolved.

• Suspicion or evidence of tax evasion

Tax evasion is a major crime in the UAE. If the FTA finds out any link to tax evasion, directly or indirectly, the refund won’t be provided. The investigation included suspected involvement in tax evasion within the taxpayer supply chain.

• Refund linked to suspected evasion goods

If you are asking for a refund on goods that are linked to tax evasion activity, your refund will not be provided. It will be declines that allow FTA to take strict actions. Such an activity would relate to potential fraud claims in the system.

• Outstanding tax returns

One of the major reasons for refund refusal is the existence of unfiled or outstanding tax returns for any type of tax. All taxpayers must ensure full compliance with the return submission obligation. This procedure should be done before looking for refunds.

• Failure to provide the requested information

If the taxpayer isn’t able to submit the required audit documentation within the specified deadlines, the refund claims won’t be provided. Therefore, it is most important to provide audit information on time.

• Lack of cooperation with audit requirements

Proper cooperation is important if you want to get the refund. You will have to be actively involved with the FTA during the audit process. You will need to work together with the FTA to make the refund process easier.

What is the Role of tax audits in refund evaluation ?

The examination conducted by the FTA to verify whether the taxpayer has fulfilled all their tax obligations is called a tax audit. You will need to follow all the rules and regulations to get the proper tax audit. However, if your refund request conflicts with the ongoing audit, FTA may hold the refund.

This case falls under Decision No. 9 of 2025, which allows the FTA to hold and decline the refund based on the audit findings. Your refund will be declined if:

• Auditors uncover discrepancies, which increases the  chance of additional tax liabilities
• A suspicious transaction or supply chain is found
• During tax filings, auditors identify incomplete or inaccurate information.

Triggers for Refund Refusal

Various factors result in refund refusal. They are:

• Proof of not paying taxes or breaking laws can be found on the check.
• You may encounter some legal issues. Like filing taxes late or not at all.
• Don’t delay or refuse to give the right paper that the auditors ask for
• They are your failure or the system’s failure to work with the audit.

Which UAE tax laws and executive regulations govern refund declines effective 1 January 2026?

Under FTA Decision No. 9 of 2025, the new tax laws are key. Key UAE tax laws and regulations support the implementation and governance of refund decline conditions. These include:

Federal Decree-Law No. 28 of 2022 on Tax Procedure

It is a primary statute looking after the administrative process in relation to all UAE tax laws. This includes VAT, corporate tax, excise tax, and general tax procedures. This particular process also looks after FTA’s authority in conducting audits, issuing assessments, assessing penalties, and managing refund processes.

Furthermore, the law also allows refund set-offs, audit procedures, cooperation requirements, and general tax obligations. Based on Article 39 of the Tax Procedures Law, FTA must set off between the due tax and any refundable amount. Furthermore, a refund will take place for the remaining balance in relation to procedural controls.

Executive Regulation of Federal Decree-Law No. 28 of 2022 (Cabinet Decision No. 74 of 2023)

The executive regulation is looking for a process linked to refund applications. They are:

• Submission requirements for tax refunds.
• Timelines for refund decisions are usually 20 business days.
• Conditions for deferring refunds where returns remain to be paid.
• Audit cooperation requirements and audit findings disclosure standards.

Federal Decree-Law No. 8 of 2017 (VAT Law) and Federal Decree-Law No. 47 of 2022 (Corporate Tax Law)

This primary tax law governs the substantive rules for VAT and corporate tax. Decision No. 9 of 2025 focuses on procedural aspects related to residual credit refund declines. On the other hand, the substantive tax rules in these laws influence how refund claims arise.

This particular claim is calculated before the application of audit and procedural conditions.

What is the Recent Amendments Effective January 2026 ?

The recent changes to the Tax Procedures Law and the VAT law bring additional changes to refund claim time frames. it has a 5 year claim limit on vat refunds. this brings refund rules up to international standards and reminds people to claim on time and to follow the rules.

Conclusion

Decision No. 9 of 2025 by FTA provides a clear condition for declining refund requests. It looks for residual tax amounts in the UAE, which focuses on conditions where taxpayers are under audit. Furthermore, the risk of additional liabilities or evasion is also key.

These conditions include failure to cooperate, outstanding returns, and audit findings. This new law is designed to follow rules more strictly. Furthermore, the law also makes sure that refunds aren’t processed prematurely or without following the process.

This decision is supported by the Tax Procedures Law and its executive regulations, along with the recent amendments to tax laws. This new rule will be useful from 1st January 2026. Lastly, the business in the UAE must follow full tax compliance, timely submissions of returns, and effective cooperation during audits. All of this will avoid refund refusals under the new law.