Art. 48(1) – Reverse Charge

Clarifies that taxpayers do not need to issue self-invoices for imports of goods and services used for business purposes.

This amendment simplifies administrative compliance.

It is important to note that despite the amendment, self-invoicing may still be required in certain cases to facilitate recovery (where supplier invoice/documents may not be available).

Art. 74(3) – Excess Recoverable Tax

Excess input tax can be carried forward for five years from the end of the tax period in which it arose.

After five years from the end of a tax period, the input tax credit cannot be utilized, offset, or claimed as a refund.

Businesses that have parked their old refunds to be claimed or offset must review their claims and ensure they seek a refund or offset the past refunds before the expiry of the statute of limitation imposed.

Art. 54 – Recoverable Input Tax

New anti-tax-evasion provisions introduced:

1.Input tax deductions will be disallowed if the supply is part of a chain linked to tax evasion and the taxpayer knew of this connection when claiming input tax.

2.Deductions may also be denied if the taxpayer ‘should have known’ based on the circumstances.

3. A taxpayer is considered aware of the tax evasion in the supply chain if they fail to verify the validity and integrity of supplies before claiming input tax in accordance with the conditions, procedures and measures laid down by the FTA.

The additional conditions for input tax recovery imposes significant requirements for having a proper system for compliance checks and supplier due diligence by a taxpayer before claiming any input tax credit.

Art. 79 (bis)

Repealed; conflicting provisions removed.

Art. 9(3) – Determination of Payable Tax

The FTA must apply excess input tax credits/overpayments to any tax or penalty obligation within five years; otherwise, the FTA may not have the right to set off the excess input tax with tax obligations.

Art. 10(5) – Voluntary Disclosure

Voluntary Disclosure will no longer be mandatory for all errors and will only be required for cases that the FTA specifies.

For other errors, (non-specified cases), corrections shall be via the tax return.

The FTA may clarify cases where Voluntary Disclosure would be required and where the revised return may be submitted.

Art. 38(1-2)– Application for Tax Refunds

Refund claims (which are in excess of due tax and penalties) must be submitted within five years of the relevant tax period.

This amendment aligns the provisions to the amendment made in the VAT Law.

Art. 38 (3–6) – New Clauses

Application for Tax Refund

Introduces special timelines as an exception to the five-year rule: 
1. Clause 3: If a credit balance arises from an FTA decision after the five-year period or in the last 90 days of that period, the taxpayer has one (1) year from the date the balance arose to submit a refund request.

2. Clause 4: For other cases where the credit arises after the five-year period or in the last 90 days, the taxpayer has 90 days from the date the balance arose to submit a refund request.

3. Clause 5: The FTA must review refund requests and notify the taxpayer of its decision (approval or rejection).

4. Clause 6: If the refund request is not submitted within the specified timelines, the taxpayer’s right to claim the refund expires permanently.

These provisions give some relaxation to taxpayers where it is impractical for a taxpayer to have filed a refund application.

Art. 46 – Statute of Limitations

(SoT)

Standard audit period remains five years, but expanded exceptions allow audits beyond this timeframe in cases where taxpayers submit refund claims in the fifth year of the SoT period. In these cases, the FTA has an additional two years to audit the refund claim from the date of submission of that claim.

Even though the five-year audit window expires, if a taxpayer submits a VAT refund claim in the fifth year, it extends the FTA’s right to audit the taxpayer (by two years from the date of submission of that refund).

Art. 54 (Bis)

FTA will issue official guidelines on practical application of VAT and Tax Procedures Law.

Art. 3 (1)– Transitional Relief

Taxpayers whose five-year claim period has expired or will expire within one year of the Decree-Law’s effective date can still request a refund or apply credit balances toward tax due or penalties.

The request must be submitted within one (1) year from January 01, 2026.

Practically,

• Businesses have until December 31, 2026 to claim outstanding refunds for tax years 2018–2020.
• Failure to act within this window will result in permanent loss of refund rights.

This relief is given to ease the burden on taxpayers to provide them some extra time for collating and filing past refund applications which if not done would otherwise become time barred.

Art. 3 (2–3) – Additional Provisions

1. Clause 2: For refund requests submitted under the above transitional relief, taxpayers may file a Voluntary Disclosure within two years of the refund request, unless the FTA has already issued a decision.

2. Clause 3: The FTA may conduct a tax audit or issue an assessment related to these refund requests even beyond

These provisions give FTA a two-year additional timeframe to conclude an audit/issue the assessment order and for the taxpayer to file a voluntary disclosure when using the transitional relief.