UAE businesses will face several changes to the way Value Added Tax is handled, following amendments announced by the Ministry of Finance. The revisions cover cash payments, employee accommodation, medical products, and the recovery of input tax.
The changes were introduced through Cabinet Decision No. 149 of 2026, which amends provisions under the Executive Regulation of Federal Decree-Law No. 8 of 2017 on VAT. The Ministry said the amendments are designed to simplify procedures, provide greater clarity for taxable businesses, and reduce disputes related to tax treatment.
One of the key changes concerns businesses making cash payments above specified thresholds. Companies will face restrictions on recovering input tax when cash transactions exceed limits that will be set separately through a decision by the Minister of Finance.
The exact thresholds have not yet been specified in the current amendment. The Ministry said the measure is intended to strengthen compliance and reduce the risk of tax evasion. Businesses that rely heavily on cash transactions will therefore need to pay close attention to the forthcoming limits and review their VAT accounting practices once the thresholds are formally announced.
The amendments also provide greater clarity on how employee accommodation should be treated when businesses calculate recoverable input tax. This is relevant for companies that provide housing to employees as part of their employment arrangements. The revised rules aim to clarify the circumstances under which related input tax can be recovered.
The Ministry also changed the methodology used for input tax apportionment. The revised approach is intended to better reflect the actual nature of a taxable person's economic activities. However, the existing apportionment methodology applicable to government entities and charities remains unchanged.
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The UAE also updated VAT provisions covering the supply and import of medical products. The changes are intended to bring the VAT treatment of these products in line with the country's revised legislative framework for the healthcare sector.
The amendments further clarify the Capital Assets Scheme, helping ensure its application remains consistent with the VAT Law. Another change addresses single composite supplies. Their VAT treatment will now be determined in line with the economic substance of the overall supply, rather than relying solely on how individual elements are presented.
The Ministry said the wider changes form part of its continuing review of UAE tax legislation. The goal is to improve transparency, make implementation more efficient and keep the VAT framework aligned with economic and legislative developments, according to the Ministry.