UAE VAT Executive Regulation Amended in 2026: Key Changes Businesses Need to Know

The UAE has introduced further amendments to its Value Added Tax (VAT) rules through Cabinet Decision No. 149 of 2026, which amends certain provisions of the Executive Regulation of Federal Decree-Law No. 8 of 2017 on Value Added Tax.

The amendments cover several areas of VAT compliance, including medical products, employee-related expenses, composite supplies, input tax recovery, capital assets and tax credit notes. While most of the amendments will take effect from 1 October 2026, certain provisions will apply from a later tax year.

For businesses operating in the UAE, these changes are important because they may affect how VAT is calculated, recovered and reported.

What Has Changed Under the New VAT Amendments?

Cabinet Decision No. 149 of 2026 introduces changes across different parts of the VAT Executive Regulation.

The amendments address:

• VAT treatment of certain medical products;

• employee-related expenses;

• composite supplies;

• recovery of input tax;

• capital assets;

• tax credit notes; and

• certain requirements relating to cash payments.

These changes are aimed at providing greater clarity on specific VAT treatments and updating the Executive Regulation in line with current tax administration requirements.

What Are the Changes Affecting Medical Products?

The amendments introduce changes concerning the VAT treatment of certain medical products.

Businesses dealing with medical products should therefore review the relevant provisions applicable to their supplies and assess whether their existing VAT treatment continues to comply with the amended Executive Regulation.

This may be particularly relevant for businesses involved in the supply or distribution of medical products where the VAT treatment depends on the nature of the product and the applicable conditions.

What About Employee-Related Expenses?

The amendments also address the VAT treatment of certain expenses incurred by businesses in relation to their employees.

Employee-related expenditure can involve different types of costs, and the ability to recover input tax may depend on the circumstances in which the expense was incurred and how it is treated under the VAT rules.

Businesses should therefore review their existing treatment of employee-related expenses and ensure that their VAT recovery positions are consistent with the amended provisions.

What Has Changed for Composite Supplies?

Cabinet Decision No. 149 of 2026 also introduces amendments concerning composite supplies.

A composite supply may involve multiple elements provided together as part of one transaction. Determining the correct VAT treatment can therefore be important where different goods or services form part of the same supply.

The amended provisions provide additional rules concerning the treatment of such supplies and should be considered when businesses determine the applicable VAT treatment for their transactions.

What Are the Changes to Input Tax Recovery?

Input tax recovery is another area affected by the amendments.

Businesses registered for VAT generally need to determine whether VAT incurred on their purchases and expenses can be recovered. The amendments introduce changes to the relevant provisions governing input tax recovery.

This means businesses should review their current VAT recovery procedures, particularly where expenses involve different categories of use or where specific recovery conditions apply.

What Has Changed for Capital Assets?

The amendments also introduce changes concerning capital assets and the treatment of input tax associated with them.

Capital assets can represent significant expenditure for businesses, making the correct VAT treatment particularly important.

Businesses that acquire or hold capital assets should review the amended provisions and consider whether their existing accounting and VAT procedures need to be updated.

What Are the New Requirements for Tax Credit Notes?

The amended Executive Regulation also addresses tax credit notes.

Tax credit notes are relevant where there is a need to adjust the VAT treatment of a transaction after the original tax invoice has been issued.

Businesses should ensure that their invoicing and accounting procedures are capable of reflecting the amended requirements and that the necessary documentation is maintained.

What About Cash Payments?

The amendments also introduce changes relating to certain requirements concerning cash payments.

Businesses should review the amended provisions to determine whether any of their existing transactions or payment processes are affected.

This is particularly relevant for businesses that continue to receive or make payments in cash as part of their normal operations.

When Will the VAT Amendments Take Effect?

Most of the amendments introduced by Cabinet Decision No. 149 of 2026 will take effect from 1 October 2026.

However, the Decision also provides for certain provisions relating to input tax apportionment to apply from a later tax year.

Businesses should therefore consider the effective date applicable to each amendment rather than treating all changes as taking effect on the same date.

What Should Businesses Do Now?

Businesses should begin reviewing their VAT processes before the amendments take effect.

This can include reviewing:

• VAT treatment of medical products;

• employee-related expenses;

• composite supplies;

• input tax recovery procedures;

• capital asset records;

• tax credit note procedures; and

• cash payment processes.

Businesses should also coordinate with their finance and accounting teams to ensure that relevant VAT records, invoices and internal procedures are updated where required.

What Does This Mean for UAE Businesses?

The latest amendments demonstrate that UAE VAT regulations continue to be updated to address specific areas of tax treatment and compliance.

For businesses, the practical importance of these changes lies in ensuring that their VAT treatment remains aligned with the amended Executive Regulation.

A review before the 1 October 2026 effective date can help businesses identify areas where their accounting, invoicing or VAT procedures may need to be updated.

Conclusion

Cabinet Decision No. 149 of 2026 introduces several amendments to the UAE VAT Executive Regulation, covering areas including medical products, employee expenses, composite supplies, input tax recovery, capital assets and tax credit notes.

With most amendments taking effect from 1 October 2026, businesses should review the provisions relevant to their activities and make any necessary adjustments to their VAT processes and records.

Understanding these changes in advance can help businesses maintain accurate VAT treatment and remain compliant with the updated UAE VAT requirements.