The UAE Federal Tax Authority has issued FTA Decision No. 17 of 2026 on the Cases and Conditions for the Recovery of Input Tax Incurred on Employee Expenses. The decision sets out defined, category-specific conditions for recovering VAT on employee transportation, food and beverages, accommodation, mobile and communication services, and parking, replacing the previous general test of whether an expense reflects normal business practice. It takes effect from 1 October 2026 and applies to all UAE VAT-registered businesses that incur these types of employee expenses.
What has changed
- Replaces the general 'normal business practice' test with defined conditions per expense category
- Covers five employee expense categories: transportation, food and beverages, accommodation, mobile/communication services, and parking
- Each category has its own specific conditions that must be met to recover input VAT
- Decision effective from 1 October 2026
- Businesses must retain documentation evidencing compliance with each category's conditions
Who is affected
This decision applies to all UAE VAT-registered businesses that incur and seek to recover input VAT on employee transportation, food and beverages, accommodation, mobile or communication services, and parking expenses.
What businesses should do
Review HR and employee benefits policies covering transport, meals, accommodation, mobile services and parking against the conditions in FTA Decision No. 17 of 2026 before 1 October 2026; update expense and VAT recovery documentation and brief finance teams on the new category-specific tests.
What to do next
Input VAT recovery is a matter for your accountant or tax adviser; Aizaa does not provide VAT services. Call +971 55 786 7621 or visit aizaa.ae.
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.