UAE Changes VAT Rules for Cash Payments, Staff Housing and Medical Products

On 8 September 2026 the Ministry of Finance announced Cabinet Decision No. 149 of 2026, amending certain provisions of the Executive Regulation of Federal Decree-Law No. 8 of 2017 on Value Added Tax. The changes sit inside the VAT framework most UAE businesses already live with: input tax recovery on purchases, how you classify supplies, and how you report on your VAT return.

The Ministry said the amendments aim to enhance tax transparency, improve implementation efficiency, and align the VAT system with international best practices. They are also intended to simplify procedures, give taxable persons greater clarity, support voluntary compliance, and reduce tax disputes. For owners and finance teams, that translates into five practical themes: cash payments, employee accommodation, medical products, composite supplies, and refinements to input tax apportionment and the Capital Assets Scheme.

This is not the same topic as FTA Decision No. 13 on TRN verification (effective 1 October 2026), nor unrelated fraud alerts such as social-engineering scams. Cabinet Decision 149 is a separate amendment to the VAT Executive Regulation, announced by MoF via WAM on 8 September 2026.

What did Cabinet Decision No. 149 of 2026 change?

The decision amends the Executive Regulation that sits under Federal Decree-Law No. 8 of 2017—the UAE VAT Law. WAM’s announcement groups the updates as follows.

The WAM release does not publish the cash thresholds themselves. It states that those limits will be prescribed in a separate decision issued by the Minister of Finance. Until that Ministerial Decision appears, you know the direction of travel—cash above a future threshold can affect input tax recovery—but not the AED amounts or timing. Watch MoF and WAM for that follow-up; do not rely on unofficial figures circulating online.

Why are cash payment limits being added to VAT rules?

Gulf News, reporting the same MoF announcement on 8 September 2026, noted that the cash-payment measure is intended to strengthen compliance and mitigate the risks of tax evasion. That fits a wider pattern in UAE tax administration: electronic payments leave a clearer audit trail than cash, and large unexplained cash outflows have long been a red flag in FTA reviews.

What we know from the official announcement is the mechanism, not the numbers. The Executive Regulation will restrict recovery of input VAT where cash payments exceed thresholds set later by the Minister of Finance. The thresholds are not yet published in the MoF or WAM materials released on 8 September 2026.

For day-to-day bookkeeping, the sensible response is procedural, not speculative. Keep supplier payments on bank transfer or other traceable methods where you can. Tag cash disbursements clearly in your purchase ledger. If you still pay suppliers in cash for legitimate commercial reasons, maintain the documentation that explains why—without assuming any particular AED limit until the Ministerial Decision lands.

How do the staff housing and medical product changes affect UAE businesses?

Employee accommodation. The amendments clarify provisions relating to employee accommodation for input tax recovery purposes. Many UAE employers—especially in construction, hospitality, retail chains, and industrial sites—provide housing or allowances tied to accommodation. Whether you can recover VAT on rent, utilities, or related costs has depended on how the supply connects to your taxable activities. The Cabinet Decision signals clearer Executive Regulation wording on that point. Until the published text is widely available, treat this as a prompt to review how staff housing costs are coded in accounts payable and on VAT returns, and to keep leases, invoices, and employment contracts aligned.

Medical products. WAM states that the decision updates provisions governing the supply and import of medical products in line with the UAE’s updated healthcare legislative framework. Pharmacies, clinics, distributors, and any business buying or selling regulated medical goods should expect the VAT treatment of certain products to follow the revised healthcare rules. Cross-check product categories against your tax invoice treatment once the amended Executive Regulation text is accessible through official channels.

Composite supplies. New provisions address the VAT treatment of a single composite supply, applied in line with the economic substance of the supply. Where you bundle goods and services—maintenance contracts with equipment, packaged professional fees, or all-in project quotes—the tax character of the bundle matters. The change pushes analysis toward what is actually being supplied, not only how it is labelled on one line of an invoice.

What changed on input tax apportionment and the Capital Assets Scheme?

Gulf News, citing the Ministry of Finance, adds detail that WAM’s shorter release does not spell out in full.

Input tax apportionment. The amendments refine the methodology used to reflect more accurately the nature of a taxable person’s economic activities. Mixed businesses—those making taxable, exempt, and out-of-scope supplies—already apportion input VAT. The Cabinet Decision adjusts how that calculation should track real activity. The existing methodology applicable to government entities and charities remains unchanged, so public-sector and charitable profiles are not swept into the same refinement.

Capital Assets Scheme. The decision clarifies the scope of the Capital Assets Scheme to ensure consistency with the VAT Law. Businesses that capitalise significant assets and adjust input VAT over time should confirm that their asset register and recovery schedules still match the clarified scope once the amended regulation is in force.

MoF framed the package as part of a continuing review of UAE tax legislation, with the wider goals of improving transparency, making implementation more efficient, and keeping the VAT system aligned with economic and legislative developments.

How does this show up in the books?

Most of these changes touch purchases and recovery, not how you charge VAT on sales.

Review payment method on supplier bills before you lock a VAT period. When the Ministerial Decision on cash thresholds is published, you will need to know which payments were cash versus bank transfer—not only the invoice date.

For staff costs, separate accommodation from salary components where your payroll and expense modules allow it. Input tax on housing-related supplier invoices is easier to defend when the employee link is documented.

For mixed activities, apportionment refinements mean your split between recoverable and blocked input VAT should follow activity data you can evidence—sales by category, floor space, or another consistent basis—not a rough percentage left unchanged for years.

Naqood is FTA-accredited accounting software for UAE businesses. Purchases, payment types, staff-related expenses, and VAT return figures live in one ledger, so when the Ministerial Decision sets cash thresholds you can trace affected payments without rebuilding spreadsheets from memory.

Useful Learning Center reads: Input VAT, Tax Invoice, and VAT Return. For the separate supplier-check regime, see TRN verification in the UAE.

Frequently asked questions about Cabinet Decision No. 149 of 2026

What is Cabinet Decision No. 149 of 2026?

It is a Cabinet Decision amending certain provisions of the Executive Regulation of Federal Decree-Law No. 8 of 2017 on VAT. The Ministry of Finance announced it on 8 September 2026 via WAM.

What are the cash payment thresholds?

They are not published yet in the MoF or WAM announcement. WAM states that thresholds will be prescribed in a separate Ministerial Decision. Until that decision is issued, no official AED limit applies under this announcement.

Does this affect input tax on employee accommodation?

Yes, in the sense that the decision clarifies Executive Regulation provisions on employee accommodation for input tax recovery. Employers providing housing or related costs should review how those purchases are documented and recovered once the amended text is available.

Did the apportionment rules change for charities and government entities?

Gulf News reports, citing MoF, that the methodology for government entities and charities remains unchanged. The refined apportionment methodology applies to taxable persons’ economic activities more broadly.

Is this the same as FTA Decision No. 13 on supplier verification?

No. Decision No. 13 is a separate FTA decision on verifying suppliers and supplies for input VAT purposes, effective 1 October 2026. Cabinet Decision 149 amends the VAT Executive Regulation and covers cash payments, accommodation, medical products, composite supplies, apportionment, and the Capital Assets Scheme.

This guide is for general information and does not constitute tax or legal advice. For how the rules apply to your specific situation, consult a qualified UAE tax adviser. Naqood is an FTA-accredited accounting platform for UAE businesses.