UAE Cabinet Updates VAT Executive Regulations and Input Tax Apportionment Methodology

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

A central component of the reform is the structural revision of Article 55 concerning standard input tax apportionment for partially exempt businesses. The new framework transitions businesses toward an output-based apportionment ratio and reinforces principles of direct attribution and actual taxable supplies.

Most general amendments are scheduled to take effect on 1 October 2026. The revised input tax apportionment methodology will apply starting from the first tax year beginning after 1 October 2027.

According to the report, entities with significant exempt revenue streams, including financial institutions, real estate firms, and holding companies, will need to evaluate their input tax recovery calculations under the revised rules.