Staying ahead of UAE regulatory change matters for every business setup, tax, residency, and banking decision. Here is what changed this week.
1. UAE amends VAT Executive Regulation, new rules take effect 1 October 2026
The UAE Ministry of Finance has issued amendments to the Executive Regulation of Federal Decree-Law No. 8 of 2017 on Value Added Tax. The amended regulation was issued on 1 September 2026 and published on the Federal Tax Authority’s official legislation portal on 10 September 2026 (Cabinet Decision No. 149 of 2026, as reported by the Ministry of Finance via the official news agency WAM). Multiple UAE tax advisory sources report an effective date of 1 October 2026 for the amended provisions; businesses should confirm the precise commencement of each clause with the Federal Tax Authority or a qualified tax advisor, as the effective date is not separately confirmed on the FTA legislation listing itself.
What changed: Reported amendments include (1) a new restriction on recovering input VAT where a taxable supply above a threshold is paid, or intended to be paid, in cash — the exact threshold is to be set by a separate Ministerial Decision and is not yet published; (2) clearer treatment of composite supplies, so that closely linked supply components follow the VAT treatment of the principal component; (3) a revised input tax apportionment methodology for businesses making both taxable and exempt supplies; (4) updated provisions on the profit margin scheme, medical products and healthcare goods zero-rating, and employee accommodation input tax treatment; and (5) confirmation of the AED 5 million (VAT-exclusive) threshold for the Capital Assets Scheme.
Who is affected: All VAT-registered businesses in the UAE, with particular impact on companies that routinely accept high-value cash payments, businesses with mixed taxable/exempt activities (partial exemption), healthcare and medical supply businesses, and employers providing staff accommodation.
Practical impact: Businesses that regularly deal in large cash transactions should review invoicing and payment-channel practices ahead of the cash-payment input VAT restriction, and should watch for the Ministerial Decision confirming the exact cash threshold. Businesses with partial exemption should revisit their input tax apportionment calculations against the revised methodology. This is a mandatory regulatory amendment, not an optional or proposed change — it amends the binding VAT Executive Regulation.
2. New VAT input tax verification (“Know Your Supplier”) rules take effect 1 October 2026
Separately, the Federal Tax Authority has issued FTA Decision No. 13 of 2026 on the Measures, Procedures and Conditions Required by Taxable Persons for Verification of the Validity and Integrity of Supplies. The decision was issued on 22 July 2026 and published on the FTA’s official legislation portal on 20 August 2026. It implements Article 54(Bis) of the VAT Law, a provision introduced by Federal Decree-Law No. 16 of 2025 — a distinct instrument from the VAT Executive Regulation amendments above.
In practical terms, the decision requires VAT-registered businesses to carry out supplier and transaction verification checks before recovering input tax, including confirming a supplier’s identity and business existence, assessing risk indicators, and validating payment methods. Professional advisory summaries of the decision (PwC, Baker McKenzie, Alvarez & Marsal and Crowe UAE) describe enhanced verification applying to suppliers whose annual supplies exceed AED 375,000, with an exemption for transactions under AED 10,000 unless a supplier’s aggregate supplies exceed AED 100,000 across a trailing or forward 12-month period, and cite an effective date of 1 October 2026. Aizaa has confirmed the decision’s existence, number, and issue/publish dates directly on the FTA’s official legislation page; the specific thresholds and effective date are drawn from converging professional-firm analyses of the published decision text, since the source PDF itself was not directly retrievable for this update. Businesses should verify exact wording with a tax advisor or the FTA.
Who is affected: all UAE VAT-registered taxable persons claiming input tax, with the heaviest practical impact on businesses with a large supplier base or frequent lower-value purchases.
What to do: with the effective date just days away, review accounts-payable and supplier-onboarding processes now to ensure identity and payment-method checks are in place before claiming input tax on post-1 October 2026 supplies. Aizaa can help set up a compliant supplier-verification workflow ahead of the deadline.
Source: Federal Tax Authority, official legislation portal — FTA Decision No. 13 of 2026 (issued 22 July 2026, published 20 August 2026). Effective-date and threshold detail cross-checked against advisory summaries from PwC, Baker McKenzie, Alvarez & Marsal and Crowe UAE. Checked 27 September 2026.
3. UAE Central Bank replaces its Operational Risk Regulation, effective 14 September 2026
The Central Bank of the UAE (CBUAE) has issued a new Operational Risk Management Regulation, Circular No. C 1/2026 (CBUAE Notice No. CBUAE/BIS-RD/2026/4047, issued 24 July 2026), which came into force on 14 September 2026. It replaces the previous Operational Risk Regulation and Standards issued under Circular No. 163/2018. Aizaa verified the regulation’s current in-force text directly on the Central Bank’s official Rulebook.
Who is affected: all Licensed Financial Institutions with legal personality in the UAE — this is wider than banks alone, and also captures insurance and reinsurance companies and other entities licensed under the Central Bank Law, including fintechs and payment/technology providers carrying out regulated financial activities.
What changed: the regulation moves institutions from simply demonstrating that controls exist to demonstrating that “Critical Operations” can continue through a disruption within defined tolerances. Key new obligations include: (1) mandatory identification and end-to-end mapping of Critical Operations — people, technology, processes, data, facilities and interdependencies — with annual testing of disaster recovery plans; (2) a Board that retains ultimate responsibility for the Operational Risk framework and must approve the institution’s risk appetite at least annually, with systemically important institutions required to establish a dedicated Board-level operational risk committee; (3) incident reporting to the Central Bank within four hours of any event that significantly affects, or is likely to affect, Critical Operations, followed by a 24-hour written summary report; (4) a Board-approved third-party/outsourcing risk strategy, with contingency and exit plans required for material arrangements and providers required to demonstrate an equivalent level of operational resilience; and (5) a requirement that each institution’s Master System of Record be continuously maintained and stored within the UAE. Material changes to Critical Operations now require external expert review and prior written Central Bank approval before implementation.
Mandatory or optional: mandatory. This is a binding Central Bank regulation, already in effect, not a proposal or draft.
Practical impact: banks, insurers, finance companies, exchange houses and licensed fintech/payment businesses in the UAE should check their operational risk framework, incident-response and escalation procedures, and vendor/outsourcing contracts against the new four-hour and 24-hour reporting clocks and the UAE data-residency requirement for the Master System of Record, and should confirm with the Central Bank or a qualified compliance advisor whether any institution-specific transition arrangements apply, since the regulation itself does not set out a separate grace period beyond its stated commencement date.
Source: Central Bank of the UAE, official Rulebook — Operational Risk Management Regulation, Circular No. C 1/2026. Checked 27 September 2026.
This update is for general awareness only and does not constitute legal or tax advice. Contact Aizaa Management Consultancy to discuss how these changes apply to your specific situation.