UAE Sets Five-Year Limit on Tax Credit Claims Under New Federal Decree-Law

The UAE government has issued Federal Decree-Law No. 17 of 2025, introducing a specific five-year limitation on the utilization of tax credits. The new legislation defines the timeframe within which taxable entities must claim and offset credits against their corporate tax liabilities, marking a shift toward more rigid fiscal reporting cycles. Mandatory Utilization Period The decree establishes a five-year "sunset clause" for tax credits, requiring businesses to utilize these financial offsets within a strict statutory window. Under the new framework, any tax credits that remain unutilized at the end of the five-year period will expire and cannot be carried forward to subsequent tax years. This measure is designed to provide greater certainty for national revenue forecasting and to prevent the accumulation of long-term tax liabilities and offsets on corporate balance sheets. The Federal Tax Authority (FTA) will be responsible for enforcing the limit, which applies to various categories of tax relief. This includes foreign tax credits—where taxes paid outside the UAE are offset against domestic obligations—and other incentives provided under the UAE Corporate Tax Law. Companies…