UAE VAT Update: New Input Tax Recovery Rules for Employee Expenses

Update: The UAE Federal Tax Authority has published FTA Decision No. 17 of 2026 on the cases and conditions for recovering input tax on employee expenses.

What changed?

The Decision provides specific conditions governing input VAT recovery for employee-related costs. It addresses categories including employee transportation, certain food and accommodation costs, temporary accommodation for new employees, telecommunications and parking expenses. Businesses should not assume that every employee expense automatically qualifies for VAT recovery: the facts, business purpose and applicable conditions remain important.

What should UAE businesses do now?

Finance teams should review their employee-expense and VAT-recovery policies, confirm that supporting tax invoices and business-purpose records are retained, and check recurring staff benefits and reimbursements against the new Decision before the next VAT return.

For broader UAE tax support, see TTM Corporate’s Corporate Tax & VAT Support. Companies establishing or restructuring in the UAE can also review our Business Setup services.

Official source

UAE Federal Tax Authority — FTA Decision No. 17 of 2026.

This article is a practical business update and does not replace advice based on a company’s specific facts.

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