UAE, 16 September, 2026: UAE businesses will need to review certain VAT recovery practices as amendments to the VAT Executive Regulations come into effect from 1 October 2026.

One of the key changes relates to large cash payments. Businesses may be restricted from recovering input VAT on supplies above a yet-to-be-announced threshold where payment is made, or intended to be made, in cash. The Ministry of Finance is expected to specify the applicable threshold and conditions.

Businesses should therefore review high-value cash transactions and prepare to use traceable non-cash payment methods, such as bank transfers and electronic payments.

Employee Accommodation Under Review

The amended rules also introduce changes to VAT recovery on employer-provided accommodation. Input VAT recovery under the general labour-law obligation route will be limited where accommodation is not specifically mandated by the Ministry of Human Resources and Emiratisation (MoHRE).

Businesses in sectors such as construction, hospitality, manufacturing, logistics and facilities management may need to reassess their treatment of staff housing and labour accommodation costs.

Companies should also review employment contracts and HR policies supporting VAT recovery on employee benefits, including accommodation and other staff-related expenses.

Other Changes Ahead

A further change to the input tax apportionment methodology for businesses making both taxable and exempt supplies will apply from the first tax year beginning after 1 October 2027.

Businesses should begin reviewing their VAT recovery processes, payment arrangements, employee benefit policies and multi-component contracts ahead of the upcoming changes.

Key date: 1 October 2026 Most of the amended VAT provisions take effect from this date, while certain details remain subject to further Ministerial Decisions and FTA guidance.