Two sets of UAE VAT changes took effect on 1 October 2026, and both affect how much input VAT your business can recover and what proof you must hold when you claim it. Cabinet Decision No. 149 of 2026 amends the VAT Executive Regulation. FTA Decision No. 13 of 2026 sets out the checks a business must complete on suppliers and supplies before it deducts input tax.
If you file VAT returns in the UAE, these UAE VAT changes affect you. This guide explains what changed, who the changes hit hardest and what to put in place now. We also cover e-invoicing, because those deadlines are close.
Key Dates for the UAE VAT Changes
- 1 October 2026: Most amendments under Cabinet Decision No. 149 of 2026 apply, and so do the verification rules under FTA Decision No. 13 of 2026.
- First tax year starting after 1 October 2027: The revised input tax apportionment rules apply. For a calendar-year business, that means tax years beginning on or after 1 January 2028.
- 30 October 2026: The largest businesses (revenue of AED 50 million or more) must appoint an Accredited Service Provider (ASP) for e-invoicing, and they go live on 1 January 2027.
- 31 March 2027 and 1 July 2027: Other businesses appoint an ASP and go live on these dates.
What Cabinet Decision No. 149 of 2026 Changes
The Decision amends the VAT Executive Regulation (Cabinet Decision No. 52 of 2017) in several places. These changes matter most for day-to-day VAT:
- Input tax apportionment: If you make both taxable and exempt supplies, you must split your residual input VAT. The method changes and moves towards an output-based basis. It applies from the first tax year starting after 1 October 2027, so you have time to model the effect.
- Composite supplies: You cannot artificially split a bundle. When components are economically integrated and not separately distinguishable, they count as one supply, and the principal component drives the VAT treatment.
- Employee-related costs: The rules now allow more input VAT recovery, but you need evidence. For example, you can recover VAT where labour law, a contract or a documented policy that meets FTA conditions requires the benefit. Employer-provided accommodation generally stays blocked.
- Cash payments: The Regulation restricts input VAT recovery on cash-settled supplies above a threshold. A ministerial decision will set that threshold.
- Purchase price and special schemes: The profit margin scheme now defines purchase price differently, and the capital asset scheme also changes.
- Other updates: Healthcare goods, tax credit notes and the test for whether a person is outside the UAE for exempt financial services also change.
Because the apportionment change comes later, your immediate work is on composite supplies, staff-related claims and cash payments.
What FTA Decision No. 13 of 2026 Requires
Most businesses will feel this change first. A valid tax invoice and a TRN no longer prove enough on their own. Before you deduct input tax, you must show that you checked both the supplier and the supply.
- Supplier verification: Confirm who the supplier is, that the business exists and that its registration details match its invoices. Do this when you first deal with a supplier, then refresh it at regular intervals. Higher-value suppliers call for deeper checks.
- Supply verification: Assess whether each transaction makes commercial sense. Look at the nature of the goods or services, the pricing, the payment terms, the supplier’s usual activity and the payment trail. Electronic payments leave a cleaner trail than cash.
- Written policy and records: Keep an internal policy that names who carries out and reviews the checks. In addition, keep evidence that you can show the FTA.
The rule fits the FTA’s wider effort to deny input tax claims linked to tax-evasion chains. If you skip the prescribed checks, the FTA may treat you as having been required to know about any such link. As a result, your claim is at risk.
Who Is Most Affected by the UAE VAT Changes?
- Businesses with partial exemption: Real estate, financial services, healthcare and education firms should model the new apportionment method early.
- High-volume buyers: Trading, logistics, construction and contracting companies with many suppliers will carry the biggest verification workload.
- Companies with staff benefits or cash purchases: Review your recovery positions before your next return.
- Businesses that sell bundles: Check that you treat packages consistently under the composite supply rule.
What to Do Now: A Practical Checklist for the UAE VAT Changes
- First, write your verification policy. Name an owner, set the checks for new and existing suppliers and decide how often you refresh them.
- Next, start with your top suppliers. Verify the suppliers behind most of your input VAT first, then work down the list.
- Then tighten onboarding. Collect licence, TRN and authorised signatory details before the first payment, and keep copies.
- Also review payment methods. Move cash purchases to bank transfer where you can, and record the reason for any that remain.
- Meanwhile, review staff and composite items. Check that a policy or contract supports each employee-related claim, and that your bundled sales follow the new rule.
- In addition, plan for apportionment. If you make exempt supplies, run your figures under the output-based method well before your 2028 tax year.
- Finally, check e-invoicing readiness. Confirm which phase you fall in, and appoint an ASP before your deadline.
E-Invoicing: Are You Ready?
E-invoicing is moving in phases. Businesses with revenue of AED 50 million or more must appoint an ASP by 30 October 2026 and go live on 1 January 2027. Other businesses follow, with ASP appointment by 31 March 2027 and go-live on 1 July 2027. Your systems, supplier data and invoice formats all need to work together, so test early rather than close to your go-live date. Check your phase and dates with the Ministry of Finance.
Official Sources
For the full legal text, read the Federal Tax Authority’s legislation page and its VAT guidance. For e-invoicing, see the Ministry of Finance website.
How HAS Global Tax Consultants Can Help With the UAE VAT Changes
Our team can review your input VAT position against the new rules, set up a practical supplier verification process and model the apportionment change for your business. Start with a VAT health check, or let us take over your VAT return filing and VAT accounting. If you have received an FTA query, see our VAT audit support. For the full range, visit our VAT services in the UAE, or book a free consultation.
You may also find our summary of Cabinet Decision No. 129 of 2025 on penalties useful.
This article is a general summary for information only and does not give advice for your specific circumstances. Please speak to us before you act on it.
UAE VAT Changes FAQs
When do the UAE VAT changes apply?
Most amendments under Cabinet Decision No. 149 of 2026 and the verification requirements under FTA Decision No. 13 of 2026 apply from 1 October 2026. The revised input tax apportionment rules apply from the first tax year starting after 1 October 2027.
What is FTA Decision No. 13 of 2026?
It sets the measures and conditions a taxable person must follow to verify the validity and integrity of supplies before deducting input tax. In practice, you need to check the supplier and the supply, keep a written policy and hold evidence of your checks.
Can I still deduct input VAT if I hold a valid tax invoice?
You still need a valid tax invoice, but it may not be enough on its own. The FTA can deny a deduction if you did not carry out the required verification, so keep evidence of your supplier and supply checks.
What changes for input tax apportionment?
Businesses that make both taxable and exempt supplies must split residual input VAT. The method changes and moves towards an output-based basis from the first tax year starting after 1 October 2027. We recommend that you model the effect on your recovery now.
Are the e-invoicing deadlines changing?
Businesses with revenue of AED 50 million or more must appoint an ASP by 30 October 2026 and go live on 1 January 2027. Other businesses have an ASP appointment date of 31 March 2027 and a go-live date of 1 July 2027. Please confirm your phase before the deadline.