UAE Enables VAT Recovery on Six Categories of Employee Expenses

Under Federal Tax Authority Decision No. 17 of 2026, businesses in the UAE can recover input VAT on six specific categories of employee expenses following rules that took effect on October 1, Arabian Business reported.

The eligible categories cover employee transport, food and beverages under specified circumstances, employee accommodation, temporary housing for new staff, mobile and internet services, and business parking.

Input tax recovery is permitted where an employer maintains a formal contractual obligation or a documented policy to provide the services free of charge. The update clarifies the legal distinction between deductible operational expenditures and non-deductible personal benefits.

Registered taxable entities must ensure all compliance documentation is retained to support deduction claims during tax audits.