UAE Updates E-Invoicing Rules and Issues Guidance on Employee Expense Deductions

The UAE Ministry of Finance issued Ministerial Decision No. 197 of 2026 to update and simplify implementation guidelines for the national Electronic Invoicing System. The regulatory revisions remove the mandatory pre-approval process for business transactions ahead of full rollout, lowering early compliance friction for mainland and free-zone enterprises. Additionally, certain internal cross-entity transactions are exempted from immediate e-invoicing requirements for a transitional period of two years.

Alongside the invoicing adjustments, Federal Tax Authority Decision No. 17 of 2026 outlined corporate tax and VAT considerations across five primary categories of employee-related expenses: transport, food and beverages, accommodation, mobile phones, and parking.

Under the FTA decision, staff transport costs are deductible provided employees are not charged, the service operates strictly between home and workplace, and cash payments are not offered as substitutes. Company-provided food and beverages are allowable when employees work in remote locations where returning home or accessing commercial food outlets is impractical.

Company-provided accommodation must qualify as an operational necessity and remain suitable rather than luxurious, though onboarding accommodation may be provided for up to 30 days. For mobile phones and parking, expenses must be solely for business purposes, supported by a formal, communicated, and enforced standard operating policy, with personal use excluded from corporate tax and VAT claims.