Despite this loss, the UAE still have an opportunity to advance to the Fifa Beach Soccer World Cup to be held in Ravenna, Italy from September 1-11.
With two of the three spots going to finalists Oman and Japan, the UAE will now have to defeat Iran in today's play-off.
Iran and Oman were tied 2-2 at the end of regulation time and even the extra-time failed to break the deadlock forcing a penalty shoot-out that the hosts went on to win 1-0.
In the first semi-final, Japan opened the scoring through Taki in the final minute of the first half and then with just two minutes into the second half, Yamuchi doubled the lead.
Several substitutions
Thereafter, the Japanese clamped down on their defence line and frustrated the UAE strikers led by the nippy Ali Karim upfront. The UAE coach Marcelo Mendes opted for several substitutions in an attempt to breach the Japanese goal, but without success.
Finally, Ali Karim managed to squeeze one past the Japanese goalkeeper for what turned out to be a consolation goal. However, that goal came in the final minute of the match and the Japanese just stuck to their defence and denied the UAE any further look at their goal.
UAE coach Mendes was not too worried about the defending Asian champions' narrow loss to Japan yesterday.
"We need to keep our focus on the next match that is going to be the most important one of our campaign," he said.