UAE Cabinet Amends VAT Executive Regulations on Input Tax Apportionment

The UAE Cabinet has issued Cabinet Decision No. 149 of 2026, enacting major amendments to the UAE VAT Executive Regulations, according to a report published by The Legal 500.

A key focus of the decision is a structural update to the standard input tax apportionment methodology under Article 55 for partially exempt businesses. The new framework transitions taxpayers to an output-based apportionment ratio and reinforces the application of direct attribution principles alongside actual taxable supplies.

Most general amendments under the decision will come into force on 1 October 2026. However, the revised input tax apportionment methodology will apply from the first tax year that begins after 1 October 2027.

The Legal 500 reports that entities with substantial exempt revenue streams, including financial institutions, real estate companies, and holding entities, will need to review their VAT recovery positions ahead of the implementation deadlines.