UAE Enacts Revisions to VAT Regime and Input Tax Recovery Rules

Revisions to the UAE Value Added Tax (VAT) framework took effect on 1 October 2026, introduced primarily under Cabinet Decision No. 149 of 2026. Under the amended regulations, input tax recovery is restricted for supplies that exceed a threshold to be prescribed by the Minister of Finance when payments are made or intended to be made in cash. The exact cash threshold has not yet been specified.

In addition, Federal Tax Authority (FTA) Decision No. 13 of 2026 took effect on 1 October 2026, mandating that taxable businesses follow designated measures to verify the validity and integrity of suppliers and supplies before claiming input tax deductions. FTA Decision No. 17 of 2026 further outlines specific conditions for input VAT recovery regarding employee accommodation and workforce-related expenses.

Cabinet Decision No. 149 also revises regulations covering the Capital Assets Scheme, the treatment of single composite supplies, and the tax classification of medical products. According to the Ministry of Finance, the revisions aim to improve clarity and tax system implementation. The amended input tax apportionment methodology carries a deferred start date, taking effect with the first tax year beginning on or after 1 October 2027.

Separately, the Ministry of Finance confirmed requirements under the UAE e-invoicing framework. Businesses with annual revenue exceeding AED 50 million must appoint an Accredited Service Provider by 30 October 2026, ahead of the mandatory implementation scheduled for 1 January 2027.