Introduction

Welcome to the January 2026 edition of the MNV Associates Tax Newsletter.

In this issue, we present a focused overview of the latest developments in UAE & other GCC countries taxation, spanning both Corporate Tax and VAT. From new FTA clarifications to regulatory updates and compliance enhancements, this edition aims to provide businesses with clear, practical insight into the most important changes shaping the current tax landscape.

Corporate Tax

Corporate Tax Credit Rules

The UAE Ministry of Finance has introduced important amendments to Federal Decree-Law No. 47 of 2022, significantly refining how businesses manage corporate tax credits. Articles 44 and 49 provide greater clarity on liquidity management and compliance.

Article 44 – Sequencing: This article establishes a mandatory order for applying tax credits:
– Withholding Tax Credits
– Foreign Tax Credits
– Specific Incentives or Reliefs
– Cash Settlement

This sequence ensures that businesses, particularly those with complex international operations, apply credits correctly and efficiently.

Article 49 – Refund Mechanism: Article 49 sets out the process for claiming refunds when Taxable Credits exceed the final tax liability for the period. Eligible businesses can now recover unused credits, supporting better cash flow management.

Together, these updates signal a maturing corporate tax environment, providing both a clear hierarchy for credits and a recovery path for overpayments, enhancing transparency and investor confidence.

Corporate Tax Exemption for Qualifying Sports Entities

Cabinet Decision No. 1 of 2026, issued on 12 January 2026, introduces a corporate tax exemption for non-commercial sports entities—both local and international. This is part of the UAE’s ongoing efforts to support sports development as a pillar of economic and social growth.

The exemption is retrospective, effective from 1 June 2023, ensuring that eligible entities are not disadvantaged for activities since the introduction of the corporate tax regime.

To avail of the exemption, entities must follow a structured two-step process:
– Complete Corporate Tax registration with the Federal Tax Authority (FTA).
– Submit a formal exemption application to the FTA to confirm eligibility.

Key Implications:
– Eligible entities will be relieved from corporate tax
– The measure encourages both local and international sports organizations to establish operations in the UAE.
– Aligns with the UAE’s ambition to be a regional and global hub for sports excellence.

This exemption provides a significant boost for the sector, reducing the tax burden and promoting investment in sports.

Excise Tax

Effective 1 January 2026, the UAE has transitioned from a flat 50% excise tax to a sophisticated tiered structure based on sugar content. This change, guided by the Federal Tax Authority (FTA), aligning taxation with public health objectives and rewards manufacturers who offer reduced-sugar alternatives.

Under the new regime:
– 0% Excise Tax: Beverages containing less than 5g of sugar per 100ml.
– 25% Excise Tax: Beverages containing between 5g and 8g of sugar per 100ml.
– 50% Excise Tax: Beverages containing 8g or more of sugar per 100ml.

Beverages with higher sugar content are therefore subject to increased tax rates, while low- or reduced-sugar alternatives benefit from lower taxation, incentivizing healthier consumption.

Businesses are required to obtain and maintain accredited laboratory test certificates confirming the sugar content of their products. In the absence of such certification, products will default to the highest tax tier (50%) to ensure compliance.

General Regulatory Updates

Tax Administration: Procedural Updates

The FTA has introduced key administrative updates effective January 2026 to improve compliance, transparency, and enforcement across VAT, Excise, and Corporate Tax.

On 12 January 2026, the FTA released its revised Taxpayer Services Manual, now serving as a comprehensive reference for all tax-related procedures.

Integrated Guidance: The manual consolidates procedures for VAT, Excise, and Corporate Tax into a single unified resource.
– Strict Timelines: New deadlines have been introduced—20 days for record amendments and 40 days for portal applications—emphasizing timely compliance.
– Practical Reference: It provides step-by-step guidance on registration, return filing, amendments, and communication with the FTA.

Enhanced Statute of Limitations

The introduction of Federal Decree-Law No. 17 of 2025, effective 1 January 2026, brings important changes to the statute of limitations:

Standard Period: The general limitation period remains at 5 years for routine audits and tax assessments.

Extended Periods: This can now extend up to 15 years in cases involving non-registration, deliberate misstatements, or tax evasion.

Implications for Taxpayers:
– Tighter Compliance Timelines: Businesses must align internal processes with the new 20-day and 40-day deadlines for submissions and amendments.
– Increased Documentation Standards: Maintaining accurate and complete records is critical, particularly in light of extended audit periods.
– Heightened Enforcement Risk: The possibility of longer audit windows reinforces the need for proactive compliance and robust tax governance frameworks.

These updates mark a significant step in the evolution of the UAE’s tax administration landscape. With stricter timelines and enhanced enforcement provisions, businesses are encouraged to reassess their compliance frameworks and ensure timely engagement with the FTA.

Kingdom of Saudi Arabia (KSA)

Amnesty Relaunch & e-invoicing Waves

Saudi Arabia’s Zakat, Tax and Customs Authority (ZATCA) has kicked off 2026 with a series of major announcements aimed at boosting compliance while offering significant relief to taxpayers.

Tax Amnesty Scheme:

On 01 January 2026 ZATCA has relaunched the Tax Penalties Exemption Initiative from 1 January to 30 June 2026

The Benefit: Waivers on fines for late registration, late filing, and amendment errors.
– To Qualify: Businesses must settle the base tax amount or start an approved instalment plan by 30 June.

E-Invoicing: New Integration Waves

ZATCA continues the rollout of e-invoicing Phase 2 (Integration Phase) across businesses in the Kingdom of Saudi Arabia. This phase requires all affected businesses to connect their invoicing systems directly with ZATCA to enable real-time reporting and ensure full compliance with VAT regulations.
– Wave 23: Deadline 31 March 2026 (Revenue > SAR 750,000).
– Wave 24: Deadline 30 June 2026 (Revenue > SAR 375,000).

Oman

Minimum Top-up Tax for Multinational Enterprises

Effective 1 January 2026, Oman has introduced a 15% Minimum Top-up Tax for multinational enterprises (MNEs) with global revenues exceeding EUR 750 million. This aligns with the OECD/G20 Pillar Two framework, ensuring large MNEs pay a minimum level of tax on profits earned in Oman. Affected businesses must calculate their effective tax rate locally and pay a top-up if the Omani tax falls below 15%.

Reverse Charge Mechanism (RCM) on Scrap Metals

From 14 January 2026, Oman has applied a Reverse Charge Mechanism on specific scrap metal categories. Under RCM, the recipient of the supply accounts for VAT, rather than the supplier, helping ensure correct tax collection and simplifying compliance. Businesses trading in affected scrap metals should update accounting systems and processes accordingly.

Tiered Excise Tax on Sweetened Beverages

Starting this month, Oman has implemented a tiered excise tax structure for sweetened drinks based on sugar content. Beverages with higher sugar levels face higher tax rates, while low- or reduced-sugar drinks benefit from lower taxation. This initiative promotes healthier consumption habits and encourages manufacturers to reformulate products for compliance.

Qatar

GTA opens 2025 Tax Filing

The General Tax Authority (GTA) announced that the Entities with a commercial registration or trade license—including tax-exempt companies and those fully owned by Qatari or GCC nationals—must submit their returns for the financial year ending 31 December 2025 by 30 April 2026. All filings are required to be completed electronically via the Dhareeba portal, ensuring a streamlined and compliant submission process.

Qatar Joins OECD Global Minimum Tax Framework

Global Minimum Tax: On 5 January 2026, Qatar was formally recognized on the OECD Central Record for implementing the Global Minimum Tax framework. Key measures include the Qualified Domestic Minimum Top-up Tax (QDMTT) and the Income Inclusion Rule (IIR), which together ensure a 15% minimum effective tax rate for large multinational groups with revenues exceeding €750 million. These rules apply to fiscal years starting on or after 1 January 2025, aligning Qatar with international tax standards.