UAE VAT Executive Regulation Amended: Key Changes Effective 1 October 2026

UAE, 24 September, 2026: The UAE Cabinet has issued Cabinet Decision No. 149 of 2026, introducing amendments to the UAE VAT Executive Regulation under Cabinet Decision No. 52 of 2017.

Most changes take effect from 1 October 2026, while the revised input tax apportionment rules will apply from the first Tax Year commencing after 1 October 2027.

🔎 Key Changes

• Composite supplies: Interconnected components that cannot be separated will generally be treated as one supply and taxed according to the principal component.

• Profit Margin Scheme: Certain purchase-related costs may be included in the purchase price only where their input tax would be non-recoverable.

• Healthcare: The terminology and scope for qualifying medical products have been updated.

• “Outside the State”: Presence in the UAE for less than 30 days, where not connected with the supply, is clarified.

• Employee benefits & accommodation: New conditions affect input tax recovery, including employer-provided accommodation.

• Cash payments: Input tax may be restricted where consideration above the prescribed threshold is settled in cash, subject to further controls.

• Capital Assets: The definition now uses a AED 5 million cost threshold, excluding VAT.

• Tax Credit Notes: The words “Tax Credit Note” must appear on the credit note itself.

📌 What Businesses Should Do

Businesses should review their VAT recovery positions, bundled supplies, employee benefits, cash payments, Capital Asset registers and accounting systems to assess the impact of the amendments.