UAE VAT Rules Amended: Key Changes Businesses Should Know
The UAE Ministry of Finance has announced amendments to the VAT Executive Regulations under Cabinet Decision No. 149 of 2026. The changes address input VAT recovery, medical products, input tax apportionment and the VAT treatment of composite supplies.
النص الكامل باللغة العربية قريباً. المحتوى أدناه بالإنجليزية.
The United Arab Emirates has introduced amendments to its Value Added Tax (VAT) Executive Regulations through Cabinet Decision No. 149 of 2026, issued on 1 September 2026 and announced by the Ministry of Finance on 8 September 2026. Most amendments came into effect on 1 October 2026, while the revised input tax apportionment provisions will apply later.
The amendments cover several areas of VAT compliance and are intended to clarify tax treatment, improve compliance procedures and align the regulations with the economic substance of business transactions.
Key changes introduced include:
1. Employee accommodation and expenses: The rules clarify the circumstances in which businesses may recover input VAT on employee accommodation and certain employee-related expenses. Employers should review their accommodation arrangements and benefit policies against the revised conditions.
2. Medical products: The VAT regulations update provisions governing the supply and import of medical products, aligning the terminology with the UAE's updated healthcare legislation.
3. Composite supplies: Where multiple components are economically interconnected and cannot be separated, the transaction may be treated as a single composite supply and follow the VAT treatment of its principal component. Businesses offering bundled goods or services should review their pricing, contracts and invoicing arrangements.
4. Cash payments: The amendments introduce a restriction on input VAT recovery for certain high-value supplies paid, or intended to be paid, in cash. The applicable monetary threshold is to be prescribed through a separate Ministerial Decision.
5. Input tax apportionment: The standard method for calculating recoverable input VAT will move from an input-tax-based approach to a method based on the value of supplies. Government entities and charities will retain a separate input-tax-based method.
6. Capital Asset Scheme and tax credit notes: The amendments also revise the definition of capital assets and clarify the wording requirements for tax credit notes.
Implementation timeline
- 1 October 2026: Most amendments became effective.
- First tax year commencing after 1 October 2027: The revised input tax apportionment provisions will take effect. For businesses following a calendar tax year, this generally means 1 January 2028.Cabinet Decision No. 149 of 2026
Businesses registered for VAT in the UAE should assess the impact of these amendments on their input tax recovery, employee benefits, supplier payments, bundled supplies and accounting procedures. Reviewing VAT policies and internal controls in advance can help businesses prepare for the revised compliance requirements.
UAE Ministry of Finance – Official Announcement
Federal Tax Authority – VAT Legislation
