11 September 2026 | Tax & Regulatory Updates
The UAE has introduced amendments to the Executive Regulation of Federal Decree-Law No. 8 of 2017 on Value Added Tax (VAT) through Cabinet Decision No. 149 of 2026.
The amendments aim to enhance legislative clarity, support voluntary tax compliance, reduce tax disputes and further align the UAE VAT framework with the evolving regulatory environment.
Key amendments
The amendments cover several areas of the UAE VAT framework, including:
1. Medical products
Updates to the VAT treatment of the supply and import of certain medical products, in line with the UAE’s updated healthcare legislative framework.
2. Employee accommodation
Clarification of provisions relating to employee accommodation for input tax recovery purposes, including circumstances where the provision of accommodation may be required under applicable legislation or specific requirements.
3. Input tax apportionment
The methodology for calculating recoverable input tax has been amended to provide greater clarity and better reflect the nature of a taxable person’s activities. Specific provisions also apply to Government Entities and Charities.
4. Capital Assets Scheme
The amendments clarify the scope of the Capital Assets Scheme, including the definition of a Capital Asset and the applicable cost and useful-life criteria.
5. Single composite supplies
New provisions clarify the VAT treatment of supplies comprising multiple interconnected components. Where the components cannot be separated based on the nature and economic substance of the supply, the supply may be treated as a single composite supply.
6. Cash payments and input tax recovery
The amendments introduce restrictions on the recovery of input tax relating to certain supplies where consideration is paid or intended to be paid in cash above a threshold to be specified by the Minister of Finance.
7. Tax Credit Notes
The requirements for Tax Credit Notes have been clarified, including the requirement for the document to clearly state “Tax Credit Note.”
Effective date
The majority of the amendments introduced by Cabinet Decision No. 149 of 2026 will take effect from 1 October 2026.
The amended provisions relating to the new input tax apportionment methodology will apply from the first Tax Year commencing after 1 October 2027.
What should businesses do?
Businesses should review the amendments and assess whether they affect their current VAT processes, particularly in relation to:
- Input VAT recovery on employee accommodation and other employee-related expenses
- Input tax apportionment
- Capital assets
- Composite supplies
- Cash payment arrangements
- VAT documentation and Tax Credit Notes
- Medical products and healthcare-related supplies
Businesses should also monitor further guidance and decisions from the relevant UAE authorities, particularly where the amendments require additional thresholds, controls or implementation details.
StratEdge perspective
The amendments represent another step in the continued development of the UAE’s VAT framework. For businesses, the key priority is to understand how the revised provisions apply to their specific transactions and ensure that their VAT processes, documentation and accounting practices remain aligned with the applicable legislation.
StratEdge Business Advisory supports UAE businesses with finance, VAT and tax compliance oversight, helping management understand regulatory changes and translate them into practical business actions.
Disclaimer: This article is for general information purposes only and does not constitute tax or legal advice. Businesses should refer to the applicable legislation and official guidance and obtain professional advice based on their specific circumstances.