UAE changes VAT rules for cash payments, staff housing and medical products

Dubai: UAE businesses will see changes to VAT rules covering cash payments above prescribed thresholds, employee accommodation, medical products and input tax recovery under amendments announced by the Ministry of Finance on Tuesday.

Cabinet Decision No. 149 of 2026 amends provisions of the Executive Regulation of Federal Decree-Law No. 8 of 2017 on Value Added Tax, with the changes aimed at simplifying procedures, providing greater clarity to taxable persons and reducing tax disputes.

One of the changes introduces restrictions on recovering input tax where cash payments exceed thresholds that will be prescribed separately in a decision issued by the Minister of Finance.

The Ministry said the measure is intended to strengthen compliance and mitigate the risks of tax evasion.

Employee accommodation and input tax

The amendments also clarify the treatment of employee accommodation for input tax recovery purposes, an area directly relevant to businesses that provide housing to their workforce.

Changes to input tax apportionment will refine the methodology used to reflect more accurately the nature of a taxable person's economic activities.

The existing methodology applicable to government entities and charities will remain unchanged.

Medical products rules updated

VAT provisions governing the supply and import of medical products have also been updated to align with the UAE's revised legislative framework for the healthcare sector.

The amendments additionally clarify the scope of the Capital Assets Scheme to ensure consistency with the VAT Law.

New provisions have also been introduced covering the VAT treatment of a single composite supply, with the tax treatment to be applied in line with the economic substance of the supply.

Wider VAT framework reviewed

The Ministry of Finance said the changes form part of its continuing review of UAE tax legislation, with the amendments intended to improve tax transparency, make implementation more efficient and align the VAT framework with international best practices.

The Ministry said the changes are also intended to facilitate compliance for businesses while ensuring the VAT system keeps pace with economic and legislative developments.