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UAE Federal Tax Authority Issues Decision on Input Tax Recovery for Employee Expenses

The UAE Federal Tax Authority published Decision No. 17 of 2026 setting conditions for recovering input tax on employee expenses. Entities may recover VAT on goods or services provided to employees under contractual obligations or documented policies. The guidance requires formal documentation and approval mechanisms ahead of VAT Executive Regulation amendments taking effect October 1, 2026.

Published Source: Federal Tax Authority
Issuing authority
Federal Tax Authority
Jurisdiction
United Arab Emirates
Publication date
September 28, 2026
Effective date
October 1, 2026
Stage
Final rule
Official document
FTA Decision No. 17 of 2026

The UAE Federal Tax Authority (FTA) has issued FTA Decision No. 17 of 2026, detailing the conditions under which taxable entities can recover input tax incurred on employee expenses.

According to the authority, the decision permits VAT recovery on goods or services provided to employees free of charge, provided they are delivered pursuant to a contractual obligation or a documented policy.

The decision also establishes specific compliance criteria for expense reimbursements. Employers are required to maintain formal documentation and approval mechanisms for work-related expenses, such as parking fees.

The FTA stated that this guidance clarifies regulatory treatment ahead of broader amendments to the VAT Executive Regulation, which take effect on October 1, 2026.

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