Quick answer: From 1 October 2026, a valid tax invoice is still required but no longer enough to recover input VAT in the UAE. Businesses must also verify and document that each supplier and supply is genuine (FTA Decision No. 13 of 2026). Cash payments above a threshold still to be set will block recovery (Cabinet Decision No. 149 of 2026). Input VAT on staff benefits is recoverable only in six defined cases (FTA Decision No. 17 of 2026). The VAT rate of 5% and the registration threshold are unchanged.
Last updated: 27 October 2026. Rules and thresholds may change, so confirm them against the official decisions.
Worried about your October VAT return? Send us your top 20 suppliers and we’ll flag which ones need verification files. See our VAT services in the UAE.
What changed in UAE VAT on 1 October 2026?
| Area | Until 30 September 2026 | From 1 October 2026 | Rule |
|---|---|---|---|
| Supplier checks | Valid tax invoice was enough | Supplier identity, address, risk indicators and supply circumstances must be checked and documented | FTA Decision No. 13 of 2026 |
| Cash payments | Payment method rarely mattered | Input VAT blocked on supplies above a threshold paid (or intended to be paid) in cash | Cabinet Decision No. 149 of 2026 |
| Employee benefits | Broad recovery via labour-law route | Recovery only in six cases, under a contract or documented policy | FTA Decision No. 17 of 2026 |
| Apportionment | Input-based method | Output-based default method from the first tax year starting after 1 October 2027 | Cabinet Decision No. 149 of 2026 |
The October changes do not alter the VAT rate or who must register. They change what you must prove to recover tax.
What supplier checks does FTA Decision 13 of 2026 require?
Article 54(bis) of the VAT Law makes verifying the “validity and integrity” of supplies a condition of deducting input tax. In practice, keep a verification file for each supplier showing:
- The supplier’s trade licence, TRN and registered address, checked against official sources.
- That the goods or services were actually delivered (delivery notes, contracts, emails).
- That prices and terms are commercially normal.
- Payment made electronically to an account in the supplier’s name. Cash, third-party payments, or payments to accounts outside the supplier’s country need a documented justification.
- Any risk indicators you noticed, and what you did about them.
How much verification does each supplier need?
The level of checking rises with spend. Summaries of the decision describe the following tiers. Confirm the exact test in the decision text.
| Spend | Level of verification |
|---|---|
| Supplies below AED 10,000 per supply (excluding VAT) | Exempt from the full verification requirements, unless the AED 100,000 level below is reached |
| AED 100,000 or more from one supplier over 12 months (past or expected) | Full verification applies, and the AED 10,000 exemption no longer helps |
| Above AED 375,000 per supplier per year | Two additional requirements apply |
Since 1 January 2026, the FTA can already deny input tax where a purchase is linked to tax evasion and you knew, or should have known. The new file is your evidence that you should not have known.
Can I still recover VAT on purchases paid in cash?
For small purchases, yes for now. Cabinet Decision No. 149 of 2026 blocks recovery on supplies above a value still to be set by the Minister of Finance where payment is in cash. The threshold had not been published at the time of writing. The safe step today is to move supplier payments to bank transfer or card, and record a business reason for any cash payment.
Can I recover input VAT on employee expenses?
Only in the six cases in FTA Decision No. 17 of 2026, each with conditions:
- Work-related transport.
- Accommodation required by the nature of the work.
- Temporary accommodation for a new joiner, up to 30 days.
- Mobile phones and data needed for the job.
- Food in remote work locations.
- Business parking.
For transport, food and accommodation, recovery fails if the employee can choose a cash allowance instead. Review employment contracts and benefits policies now. If payroll is outsourced, ask your provider how benefits are recorded. See our payroll outsourcing services.
Need your VAT processes updated? FAR Consulting’s tax team builds supplier verification files, reviews benefit policies and checks your October return before you submit. Our corporate tax consultants in the UAE can also check how these changes affect your corporate tax position.
Is there a time limit for claiming excess input VAT?
Yes. Since 1 January 2026, excess recoverable input tax that is not used or claimed within five years of the end of the tax period in which it arose can lapse. Businesses with older unclaimed balances should review their position promptly.
What should I do before filing my next VAT return?
- List suppliers by spend and build verification files for the largest first.
- Add a verification step to supplier onboarding.
- Stop cash payments to suppliers, or document the reason for each.
- Review employee benefit policies against the six cases and remove cash-in-lieu options where needed.
- Reconcile input VAT claimed since 1 October against the new conditions.
- If an earlier return over-claimed input VAT, correct it through voluntary disclosure.
E-invoicing will add another layer of data matching from 2027. See our UAE e-invoicing readiness checklist. Clean books make both easier: our accounting and bookkeeping services can help.
Frequently asked questions
Is a tax invoice still enough to recover input VAT in the UAE?
No. From 1 October 2026 you also need documented supplier and supply verification under FTA Decision No. 13 of 2026.
What is the cash payment threshold for input VAT?
It has not been set yet. A separate Ministerial Decision will specify the amount.
Can I recover VAT on staff accommodation?
Only where the accommodation is required by the work, or is temporary for a new joiner for up to 30 days, and the conditions in FTA Decision No. 17 of 2026 are met.
Did the UAE VAT rate change in October 2026?
No. The rate remains 5%. The changes concern input tax recovery.
When does the new apportionment method apply?
From the first tax year beginning after 1 October 2027.
How much supplier verification is required?
It depends on spend. Summaries of FTA Decision No. 13 of 2026 say supplies below AED 10,000 (excluding VAT) are exempt from the full checks, but the exemption stops applying once purchases from a supplier reach AED 100,000 over 12 months, and two further requirements apply above AED 375,000 per supplier per year. Confirm the exact test in the decision.
Is there a time limit for claiming excess input VAT?
Yes. Since 1 January 2026, excess input VAT not used or claimed within five years of the end of the tax period in which it arose can lapse.
Protect your input VAT with FAR Consulting
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Sources and Official References
- FTA Decision No. 13 of 2026 on Verification of Supplies before Input Tax Deduction, PwC Middle East tax alert
- UAE announces amendments to VAT Law effective 1 January 2026, DLA Piper (Federal Decree-Law No. 16 of 2025)
- Cabinet Decision No. 149 of 2026 amending the VAT Executive Regulation, UAE Cabinet
- FTA Decisions No. 13 and No. 17 of 2026, Federal Tax Authority
- Federal Decree-Law No. 8 of 2017 on Value Added Tax (Articles 53 and 54)
Disclaimer: This content is provided for general informational purposes only and does not constitute tax or legal advice. The thresholds and conditions described should be confirmed against the official decisions before relying on them. Please consult a qualified adviser for your circumstances.
