UAE Sees Strong Uptick in Corporate Tax Compliance as VAT Refunds and Digital Systems Expand
UAE reports rising corporate tax compliance and expanded digital VAT refunds: 9% increase in registrants, 43,900 refund claims worth AED3.72bn to March 2026.
The Federal Tax Authority (FTA) reported a marked improvement in tax compliance across the UAE, with corporate tax registration and timely filings rising in the first quarter of 2026. Director-General Abdulaziz Mohammed Al Mulla said the increase in adherence to tax deadlines and electronic processes reflects the maturity of the UAE’s tax framework. The FTA also disclosed significant growth in citizen VAT refund claims for new homes and a steady expansion of digital systems serving tourists and retailers.
Compliance Rates Rise in Q1 2026
The FTA recorded a 9% increase in the number of registered taxpayers during the first quarter of 2026 compared with the same period in 2025. This uptick covers registrations within statutory deadlines, submission of tax returns and annual declarations, and on-time payment of liabilities. Abdulaziz Mohammed Al Mulla attributed the improvement to robust legislative and procedural measures and advanced digital compliance tools implemented by the authority.
Citizen VAT Refunds Reach AED3.72 Billion
Since the launch of the VAT refund service for citizens building new homes, the FTA approved around 43,900 refund applications totalling AED3.72 billion up to March 31, 2026. During Q1 2026 alone, 1,812 new citizen refund applications were approved with refunded amounts exceeding AED167 million. The FTA noted this represented growth from 1,656 applications worth roughly AED148 million in Q1 2025, an increase of 9.42% in application numbers and 12.84% in refunded value.
Tourist Refund Network Expands to Over 19,000 Retailers
The digital system for VAT refunds to tourists has grown substantially, with 19,130 retail outlets electronically connected to the scheme by the end of March 2026. In the first quarter, 233 additional commercial outlets joined the network, further widening the points where eligible tourists can claim refunds. The infrastructure now includes 100 self-service refund terminals distributed across shopping centres, hotels and outbound travel hubs to streamline refund processing for visitors.
Digital Tools and International Best Practices Cited
Al Mulla emphasised that the UAE’s tax administration leverages digital compliance mechanisms that rank among the most advanced globally. The authority’s focus on user-friendly electronic interfaces aims to reduce friction for businesses and taxpayers while maintaining accuracy and auditability. These digital advances have supported faster processing of citizen refunds and expanded connectivity with retail partners for tourist refunds.
Challenges in Corporate Tax Adoption for New Firms
Despite overall gains, the FTA acknowledged challenges linked to the relative novelty of corporate tax for parts of the business community. Some segments—particularly newly established companies—face knowledge gaps about registration obligations, reporting requirements and compliance timelines. The authority continues outreach and educational efforts to assist startups and SMEs in meeting corporate tax obligations and to reduce unintentional non-compliance.
Tiered Excise Tax on Sweetened Beverages Implemented
A major policy change took effect on January 1, 2026, when the UAE shifted to a tiered selective excise tax for sweetened beverages. The new model ties the excise rate to the quantity of sugar and alternative sweeteners per 100 millilitres, replacing the prior flat-rate approach. Officials said the measure supports national public health goals and aligns taxation with efforts to reduce sugar consumption across the population.
The FTA’s reported figures for registrations, citizen VAT refund approvals and expansion of the tourist refund network signal continuing maturation of the UAE’s tax ecosystem. The authority indicated it will keep refining digital services and compliance support through outreach, updates to regulatory guidance and technological enhancements as it monitors taxpayer behaviour beyond March 31, 2026.