UAE Amends VAT Executive Regulation - Key Changes from 1 October 2026
The UAE Cabinet has issued Cabinet Decision No. 149 of 2026, amending the Executive Regulation of the VAT Law. The Decision was issued on 1 September 2026 and most changes apply from 1 October 2026. According to the Ministry of Finance, the aim is to simplify procedures, give taxpayers greater clarity and reduce disputes.
Main changes from 1 October 2026
- Cash payments: input tax cannot be recovered on cash payments above a threshold to be set by the Minister of Finance.
- Employee costs: clarified rules on recovering input tax on employee accommodation and other employee-related costs.
- Composite supplies: new rules for identifying a single composite supply based on its economic substance.
- Medical products: updated rules on the supply and import of medical products.
- Capital Assets Scheme and Profit Margin Scheme: scope clarified.
Input tax apportionment - from 2027
The standard method for apportioning input tax between taxable and exempt activities has been revised. These rules apply from the first tax year starting after 1 October 2027. Businesses with mixed supplies, such as real estate, financial services and holding companies, should model the impact early.
What businesses should do
- Review VAT policies, contracts and accounting systems
- Check how cash purchases are paid and recorded
- Review staff accommodation and benefit arrangements
- Run a trial apportionment calculation on current-year figures
Official source: UAE Ministry of Finance - Tax Legislation (Cabinet Decision No. 149 of 2026)