Qualifying Free Zone Persin Regime Updates: UAE Ministerial Decision No. 229 of 2025

On September 3, 2025, the UAE Ministry of Finance (MoF) released Ministerial Decision No. 229 of 2025 relating to the Qualifying Activities and Excluded Activities under the Qualifying Free Zone Person (QFZP) regime under the UAE CT Law. This release introduces significant changes to the definition of Qualifying Commodities under the “Trading of Qualifying Commodities” Qualifying Activity. 

Key changes include:

• Removal of the requirement for the commodity to be in “raw form.”
• Inclusion of industrial chemicals and Associated By-products (but exclude products packaged for retail sale).
• Inclusion of environmental commodities.
• Addition of associated structured commodity financing activity.

For further information on Ministerial Decision No. 229 of 2025, please click here.

FTA Releases Public Clarification CTP009 – Transitional Rules for Immovable Property

On September 26, 2025, the UAE FTA issued Public Clarification CTP009, which provides guidance on applying the Valuation Method under the Transitional Rules as outlined in Ministerial Decision No. 120 of 2023. This clarification is particularly relevant for real estate developers and applies to immovable property held before the first tax period.

Application of the valuation method:

• For each Qualifying Immovable Property, calculate the excluded gain by deducting the higher of the original cost or net book value from the market value as of the start of the first Tax Period.
• Allocate the excluded gain based on revenue recognition principles under the Applicable Accounting Standards.
• Identify the accounting profits attributable to the Qualifying Immovable Property.
• The excluded gain determined under Step two is used for adjustment of the accounting profits determined under Step three in each relevant Tax Period up to the amount of such accounting profits.

For further details regarding this clarification, please click here.

INDIRECT TAX UPDATES – Value Added Tax (VAT), Customs & Excise Tax

The UAE FTA Publishes Clarification on Tiered Volumetric Model for Sweetened Drinks

On September 11, 2025, the UAE FTA released Public Clarification EXTP012, setting out how Excise Tax will apply to sweetened drinks from January 1, 2026. The update confirms the long anticipated shift away from a flat ad valorem rate of 50% towards a tiered volumetric model where liability is determined by sugar content. 

Key highlights:

• Primary Changes: From January 2026, the previous system will be replaced by a volumetric tax, based on sugar content per 100 ml.
• Definitions of sugars and sweeteners.
• Beverages will be taxed according to their sugar and sweetener content, with different treatment depending on composition.
• Compliance Requirements:
  • Businesses must re-register or update their registrations to reflect new classifications.
  • Businesses must also obtain a laboratory report from an FTA-accredited testing body confirming the sugar and sweetener content of each product.
  • Products without a lab report will be treated as provisionally high sugar until evidence is submitted.

For further information on this clarification, please click here.

Guidance on Input Tax Apportionment

The FTA has published a guide on Input Tax Apportionment (VATGIT1), which provides further clarity on the mechanism for recovering Input Tax where taxable persons make both taxable and exempt supplies.

The guide covers the changes introduced in the Executive Regulations - the Specified Recovery Percentage (SRP). This is an Input Tax recovery rate based on the registrant’s recovery percentage from the previous tax year. 

Key highlights:

• How does the SRP work?
• Process Related Changes (SRP and other special methods)
• Notifications Relating to Change in Business
• Special Cases for Tax Year-End

For further information on this guide, please click here.

E-INVOICING AND TAX TECHNOLOGY UPDATES

Latest VAT Law Amendments for the Upcoming UAE E-Invoicing Implementation

The UAE MoF has published the amended VAT Executive regulations (Cabinet Decision No. 100 of 2025 to the Federal Decree Law No. 8 of 2017) which greatly impacts businesses that are coming under the radar of UAE e-Invoicing due to be rolled out in July 2026. 

Tax document format (tax invoices and credit notes as prescribed under Articles 59 and 60) requirements have changed extensively and administrative exceptions granted by the FTA are no longer available.

Key highlights:

• Simplified Tax Invoices: Such formats will no longer be allowed for businesses covered under the UAE e-Invoicing scope.
• Administrative Exceptions Provided by the FTA for Not Issuing Tax Invoice And/or Tax Credit Notes: Business enjoying this relief currently will no longer be able to apply for this post UAE e-Invoicing roll out in July 2026.
• Tax Invoices for Wholly Zero-Rated Supplies: Currently, businesses are not required to issue a tax invoice where sufficient records are available to determine the nature of supply enjoying zero rated VAT treatment. This will no longer be applicable once UAE e-Invoicing mandates roll out. Businesses will need to issue UAE schema compliant e-Invoices for such wholly zero-rated supplies.

For further details on the latest VAT amendments and to read our commentary, please click here.

Timely Insights Into the Ministerial Decisions Released on the UAE Electronic Invoicing System 

The UAE MoF has issued Ministerial Decision No. 243 of 2025 on the Electronic Invoicing System (EIS) and Ministerial Decision No. 244 of 2025 on its implementation aimed at enhancing transparency, improving compliance, and aligning the UAE with global best practices in tax digitalisation. 

While these decisions offer relief to taxpayers in financial services and international transportation, they also introduce a low revenue threshold of AED 50 million for the first wave of mandatory compliance. 

Key highlights:

• Decision No. 243/2025 – Establishment of the EIS
  • Mandatory Scope: Applies to all businesses conducting business activities in the UAE.
  • Key Exclusions: Government entities, certain international airline passenger transportation, certain international transportation of goods, and exempt or zero-rated financial services – subject to specific conditions.
  • Obligations on Businesses: Under the EIS, businesses are required to issue and transmit e-Invoices and Credit Notes through the system within 14 days of the transaction. Both issuers and recipients must appoint an Accredited Service Provider to handle the exchange and reporting of e-Invoices. Additionally, all data must be stored within the UAE, in accordance with the Tax Procedures Law.
• Decision No. 244/2025 – Phased Implementation Timeline 
  The rollout of mandatory e-Invoicing will take place in phases, based on:
  • Revenue thresholds (AED 50 million)
  • Taxpayer type (large business, other business, and government entities)

For further information on both Decisions, please click here.

GCC COUNTRIES UPDATES

Kingdom of Saudi Arabia (KSA)

E-Invoicing Phase 2 – 24th Wave Announcement 

On September 26, 2025, the Zakat, Tax and Customs Authority (ZATCA) announced the commencement of Phase Two (Integration Phase) of the e-Invoicing project for taxpayers included in the 24th wave, comprising entities whose VAT-taxable revenues exceeded SAR 375,000 during any of the calendar years 2022, 2023, or 2024. Affected establishments are required to integrate their invoicing systems with the FATOORA platform no later than June 30, 2026. Phase Two introduces additional technical requirements, including the issuance of invoices in a structured format and the inclusion of mandatory data elements. Targeted taxpayers will be notified in advance, and the rollout will continue progressively across subsequent waves. This phase supports the Kingdom’s digital transformation agenda and aims to enhance consumer protection.

For further details on this announcement, please click here.

Announcement of the Amended Implementing Regulations of the White Land and Vacant Real Estate Tax Law 

On August 22, 2025, Ministry of Municipalities and Housing published amended Implementing Regulations for the White Land and Vacant Real Estate Tax Law. The regulations apply to undeveloped land within designated urban boundaries exceeding 5,000 sqm, with cities classified into zones subject to annual tax rates ranging from 2.5% to 10% based on development priorities. Landowners, including co-owners, must pay the tax proportionally, with invoices issued electronically. The regulations also outline conditions for tax suspension or refund, authorise private sector involvement in collection, and allocate revenues to housing projects in coordination with the Ministry of Finance. 

For further details on this announcement, please click here.

Publication of Judicial Principles in Zakat and Tax Disputes

In August 2025, the General Secretariat of the Zakat, Tax and Customs Committees issued a set of Judicial Principles Digests derived from Appeal Committee decisions issued in 2024. These digests, published in both Arabic and English, aim to enhance transparency and provide a reliable legal reference for professionals and researchers involved in Zakat and Tax dispute resolution. 

For further details on this announcement, please click here.

Oman

Oman Postpones Phase Three of Digital Tax Stamp (DTS) Implementation

The Oman Tax Authority has announced a three-month postponement of Phase Three of the DTS system. The postponement applies to the local sale and circulation of the following products without a DTS:

• Carbonated drinks
• Energy drinks
• Alcoholic beverages

The deadline has been extended from August 1, 2025, to November 1, 2025, allowing additional time for affected stakeholders to prepare for compliance.

Bahrain

Bahrain’s Pillar Two: Advance Payment of Domestic Minimum Top-Up Tax (DMTT)

As Bahrain rolls out its DMTT effective for fiscal years from January 1, 2025, one key compliance milestone is the quarterly advance payment obligation:

• Designated Filing Constituent Entities (CEs) must settle DMTT payments in advance every three months, with each payment due within 60 days after quarter-end.
• In the transition year, the first payment may be deferred and paid together with the second instalment.
• Two methods are available to compute the advance amounts - Prior Year Method or Current Year Method.
• If a filing CE elects exemptions or reliefs, there would be no requirement to make advance tax payments – unless there is a change in eligibility, which must be reported.

For further information on the advance payment process, please click here.

ARTICLES/BROCHURES

In addition to the updates mentioned above, we have also published the following articles/brochures:

The Oman Personal Income Tax Law

Following the recent publication of the Omani Royal Decree 56/2025, which introduces a 5% personal income tax on net income, defined as income exceeding OMR 42,000 (or ~USD 109,240) after deductions, exemptions, expenses and losses. Resident taxpayers are taxed on worldwide income, while non-resident taxpayers are taxed on Oman-sourced income. 

We have summarized the top five aspects to consider and provided an overview of the law in our latest brochure. 

The brochure covers:

• Tax certainty
• Alternative “savings” mechanisms, constant notifications and expat attraction
• Compliance burden
• Payroll and withholding obligations
• Tax procedures

For the full brochure, please click here.

UAE Corporate Tax and Transfer Pricing

On December 9, 2022, the UAE MoF published Federal Decree Law No.47 of 2022 (UAE CT Law). The UAE CT Law applies to Taxable Persons operating in the UAE and is effective for financial years beginning on or after June 1, 2023. 

The article covers the following key points:

• Who is subject to UAE CT?
• What are the UAE CT rates?
• Qualifying Free Zone Person Regime
• Tax Reliefs and Tax Elections
• UAE Transfer Pricing Requirements – Related Party Transactions and Connected Persons
• Compliance Requirements

For further details on this article, please click here.

For any questions around implementing these key tax updates, please reach out to a member of the A&M Tax Team (listed on this page).