Ministry of Finance announces amendments to VAT Executive Regulation

The Ministry of Finance has announced the issuance of Cabinet Decision No. (149) of 2026 amending certain provisions of the Executive Regulation of the Federal Decree-Law No. 8 of 2017 on Value Added Tax (VAT), as part of its ongoing efforts to further develop the UAE's tax system to enhance tax transparency, improve the efficiency of implementation, and further align the VAT system with international best practices.

The amendments aim to simplify procedures and provide greater clarity for taxable persons, thereby supporting voluntary compliance and reducing tax disputes. They introduce a number of technical and regulatory enhancements, including updating the provisions governing the supply and import of medical products in line with the UAE's updated legislative framework for the healthcare sector, and clarifying the provisions relating to employee accommodation for input tax recovery purposes.

The amendments also include clarifying the application scope of the Capital Assets Scheme to ensure consistency with the provisions of the VAT Law.

Furthermore, the amendments refine the methodology for input tax apportionment to more accurately reflect the nature of taxable persons' economic activities, while retaining the existing methodology applicable to government entities and charities.

They also introduce provisions governing the VAT treatment of single composite supply in line with the economic substance of the supply, in addition to new provisions restricting the recovery of input tax in case of cash payments exceeding the thresholds to be prescribed in a decision issued by the Minister of Finance. These measures are intended to strengthen compliance and mitigate the risks of tax evasion.

The Ministry of Finance confirmed that these amendments form part of its ongoing approach in reviewing and enhancing the UAE's tax legislation to ensure it keeps pace with evolving economic and legislative developments, strengthens the competitiveness of the country's tax environment, supports the effective implementation of the VAT system, and facilitates compliance for the business community.

WAM