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The UAE Ministry of Finance announced on September 8, 2026, that Cabinet Decision No. 149 of 2026 had been issued to amend several provisions of the Executive Regulation for Federal Decree-Law No. 8 of 2017 on Value Added Tax. The changes update rules on the supply and import of medical products to align with updated healthcare sector legislation while clarifying input tax recovery on accommodation and other employee benefits required by labor law or company policy. A statement from the ministry noted that these adjustments are intended to provide greater procedural clarity for taxable persons.
According to the Ministry of Finance, the decision also revises the input tax apportionment methodology for most businesses, with application from the first tax year beginning after October 1, 2027, while government entities and charities continue under the existing approach. It clarifies the scope of the Capital Assets Scheme to ensure consistency with the VAT law and establishes VAT treatment for single composite supplies according to economic substance. Additional provisions restrict input tax recovery on cash payments exceeding thresholds that will be defined in a separate ministerial decision.
Federal Tax Authority data shows that combined VAT and excise tax revenues reached AED 46 billion in 2025, an increase from AED 41 billion the previous year, since the five-percent VAT system took effect in 2018. The Ministry of Finance has updated the original Cabinet Decision No. 52 of 2017 on multiple occasions to address implementation experience and evolving economic conditions. KPMG has detailed the amendments in a client briefing titled Cabinet Decision No. 149 of 2026 – Amending certain provisions of the VAT Executive Regulation.
KPMG’s analysis of the decision highlights implications for businesses in the healthcare supply chain and those managing employee-related expenses under regulatory obligations. The briefing examines how the refined apportionment rules may affect partial exemption calculations across different economic sectors. It further notes the introduction of composite supply provisions as a move toward substance-based taxation consistent with international practice.
The Ministry of Finance statement added that persons present in the UAE for fewer than 30 days can be treated as non-residents for VAT purposes when their visit is unrelated to any supply. This clarification is expected to simplify compliance for short-term business activities and certain cross-border arrangements. Employers should benefit from increased certainty on recoverable input tax for items mandated by law or internal policies.
The decision was published in English by the ministry to facilitate understanding among international investors and advisers operating in the UAE. Taxable persons are advised to evaluate their existing systems for apportionment, capital assets and composite supplies in advance of the revised rules taking effect. Further guidance from the Federal Tax Authority is anticipated to support smooth implementation of the amendments.
