As part of its ongoing efforts to further develop the UAE’s tax system to improve tax transparency, increase implementation efficiency, and further align the VAT system with international best practices, the Ministry of Finance announced the issuance of Cabinet Decision No. (149) of 2026, which amends certain provisions of the Executive Regulation of the Federal Decree-Law No. 8 of 2017 on Value Added Tax (VAT).
In order to encourage voluntary compliance and lessen tax conflicts, the modifications seek to streamline processes and give taxable individuals more information. They introduce several technical and regulatory improvements, such as clarifying the provisions pertaining to employee accommodation for input tax recovery purposes and updating the regulations governing the import and supply of medical products in accordance with the UAE’s updated legislative framework for the healthcare sector.
To guarantee compliance with the VAT Law’s regulations, the modifications also define the Capital Assets Scheme’s applicability area. Additionally, while maintaining the current methodology that applies to government agencies and charitable organisations, the revisions improve the input tax apportionment methodology to better represent the nature of taxable people’ economic activity. Along with new provisions limiting the recovery of input tax in the event that cash payments exceed the thresholds to be prescribed in a decision issued by the Minister of Finance, they also introduce provisions governing the VAT treatment of single composite supplies in accordance with the economic substance of the supply. These steps are meant to improve compliance and reduce the likelihood of tax evasion.
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