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The Ministry of Finance detailed the amendments in a statement released through the Emirates News Agency, noting that Cabinet Decision No. 149 of 2026 modifies certain provisions of the Executive Regulation for Federal Decree-Law No. 8 of 2017 on Value Added Tax. These updates form part of ongoing efforts to develop the tax system by boosting transparency, improving implementation efficiency and harmonising rules with global standards, according to the ministry. The changes seek to simplify compliance processes and offer taxable persons clearer guidance, thereby encouraging voluntary adherence while lowering the potential for disputes. The ministry confirmed that the refinements include several technical adjustments across key areas of VAT application.
Provisions governing the supply and import of medical products have been updated to reflect the UAE’s revised legislative framework for the healthcare sector, the Ministry of Finance reported. Clarifications were introduced on the treatment of employee accommodation specifically for purposes of input tax recovery, an issue relevant to businesses providing workforce housing. The statement further outlined adjustments to the scope of the Capital Assets Scheme, ensuring full consistency with the primary VAT law. Such measures are expected to provide businesses with more precise operational parameters.
The methodology for input tax apportionment underwent refinement to better correspond with the actual economic activities of taxable persons, a Ministry of Finance assessment found. Existing apportionment rules applicable to government entities and charities were retained without alteration. New rules were added to govern the VAT handling of single composite supplies, with treatment now required to follow the economic substance of each transaction. These elements were presented together in the September 8 announcement as interconnected improvements to the regulatory structure.
Additional provisions restrict input tax recovery in instances of cash payments that surpass thresholds, which will be specified in a forthcoming decision by the Minister of Finance. The ministry stated that this restriction is designed to reinforce compliance measures and address potential tax evasion risks. The amendments were framed as a targeted response to evolving economic conditions and legislative needs since the original VAT law took effect in 2018. Businesses will need to review their practices against the updated text once it is formally published.
According to the Ministry of Finance, the decision represents a continuation of periodic reviews aimed at maintaining the competitiveness of the UAE tax environment and supporting effective VAT administration. The statement emphasised that the changes keep pace with broader developments while facilitating smoother interactions for the business community. No immediate effective date beyond the announcement was specified in the ministry release, with implementation expected to follow standard procedural timelines for such cabinet decisions.
