Input VAT carried forward is not indefinite. Credits arising in 2021 begin to fall out of time during 2026 under the five-year limitation period. Businesses that have carried excess input VAT without ever claiming a refund stand to lose real money before the end of the year.
What happened
Nothing in the legislation has changed. What has changed is the calendar: 2026 is the first year in which the five-year limitation period under the UAE VAT framework produces concrete effects on credits arising in 2021. Input VAT — the VAT a business pays on its purchases and can set against the VAT it charges — that has simply been carried forward from that year begins to fall out of time.
What changes in practice
A recoverable balance that has been rolled forward return after return, without a refund claim ever being submitted, stops being an asset and becomes a write-off. Because the loss happens by inaction rather than by assessment, there is no notification: the balance is there in one period and irrecoverable in the next.
Who it applies to
VAT-registered businesses carrying input VAT credits arising in 2021 or shortly after. Trading and import businesses are the most exposed, since purchases routinely exceed sales in the early years and the resulting credit accumulates rather than being absorbed.
The exposure
Permanent loss of the credit. The amount is often material for import-led businesses and is frequently unquantified, because the balance has been carried in the return without anyone reconciling it back to the year in which it arose.
What to do now
Extract the carried-forward credit position from historical VAT returns and age it by the year in which it arose. Where 2021 balances are identified, prepare and submit refund claims before 31 December 2026 rather than carrying them forward again. Supporting documentation should be assembled before filing, since refund claims attract review.
Sources
Published 16 August 2026 on the basis of public sources and official United Arab Emirates instruments. This is not legal or tax advice. Verify your position with a qualified professional before acting.