The tax changes in the UAE in 2026 are quite substantial, and they will certainly continue to affect companies' operations in 2027. Amendments to the VAT law have come into force, the Executive Regulation has been updated, and the Federal Tax Authority (FTA) has introduced new requirements for verifying suppliers and clarified the conditions for recovering input VAT.
At the same time, the UAE is preparing for the mandatory introduction of electronic invoicing (e-invoicing), which begins as early as January 2027.
For businesses, this means not only new requirements for documents but also the need to review accounting processes, the way they work with counterparties and their internal tax control procedures.
We look at seven key changes and explain what companies should be paying attention to right now.
1. Amendments to the VAT law: new rules from 1 January 2026
Federal Decree-Law No. 16 of 2025 came into force on 1 January 2026, amending a number of provisions of the main VAT law (Federal Decree-Law No. 8 of 2017).
What has changed?
Self-invoicing is no longer required under the Reverse Charge Mechanism (RCM).
When the reverse charge mechanism applies, a business no longer needs to issue a tax invoice to itself. However, it must keep the documents supporting the transaction in accordance with the legal requirements.
A five-year deadline for VAT refunds.
A five-year period has been set for submitting a refund claim for excess recoverable tax after the relevant tax offset. This is particularly important for companies that have been building up VAT credits for years.
Tighter control over tax abuse.
The FTA has been given additional powers to deny input VAT recovery if it establishes that a supply forms part of a tax evasion scheme.
As a result, a correctly issued Tax Invoice no longer guarantees the right to recover input tax on its own if there are circumstances indicating tax violations in the supply chain.
What does this mean for businesses?
Companies need to review their procedures for documenting transactions, claiming VAT refunds and verifying suppliers.
2. Supplier verification becomes part of tax control
One of the most significant changes is FTA Decision No. 13 of 2026, which sets out requirements for verifying the validity and genuineness of supplies before input VAT is recovered.
This goes beyond a formal check of a counterparty's trade licence or tax registration number.
Companies need to pay attention to whether transactions are genuine, whether the supplier's business matches the nature of the goods or services supplied, and to any circumstances that may point to tax violations.
In practice, a verification system may include:
— confirming the supplier's legal status and tax registration;
— checking that the trade licence is valid;
— assessing whether the services or goods match the counterparty's business;
— documentary evidence that obligations have actually been performed;
— assessing unusual payment terms and other signs of elevated risk;
— keeping records of the checks carried out.
The exact scope of the mandatory steps depends on the requirements of the FTA decision and the circumstances of the transaction.
Why does this matter?
If a transaction turns out to be linked to tax evasion, the company may have its input VAT recovery denied.
The buyer's good faith and its ability to evidence the checks it has carried out therefore become crucial.
Conclusion: counterparty verification is no longer just a matter of corporate security — it is also a way of protecting your input tax recovery.
3. New conditions for recovering VAT on employee expenses
In September 2026, the FTA published Decision No. 17 of 2026 on the conditions for recovering input VAT on certain employer expenses relating to employees.
The issue is especially relevant for companies that provide staff with accommodation, transport, meals and other corporate benefits.
The decision clarifies the recovery conditions for certain categories of expenses, including those relating to:
— the provision of company transport;
— staff meals in certain circumstances;
— accommodation provided because of the nature of the work;
— temporary accommodation for new employees;
— mobile phone and internet services for business purposes;
— certain parking expenses.
The key principle: not every expense paid by the employer automatically gives the right to recover VAT.
To recover the tax, the company must show that the expenses meet the established requirements and are connected with its business activities.
For example, if a company pays for employees' mobile phone services, it should document the terms of business use and how such expenses are controlled.
What should you check?
Employment contracts, internal HR policies, corporate benefits policies and documents confirming the business necessity of the expenses.
4. The VAT Executive Regulation has been updated
On 8 September 2026, the UAE Ministry of Finance announced the adoption of Cabinet Decision No. 149 of 2026, amending the VAT Executive Regulation.
Most of the changes apply from 1 October 2026.
The amendments cover several areas.
Composite supplies.
The rules for classifying transactions consisting of several goods or services have been clarified. This is important for determining the correct tax treatment and applying the appropriate VAT rate.
Employee expenses.
Clarifications have been made regarding staff accommodation and the conditions for recovering input tax.
Medical goods.
The provisions governing the supply and import of certain medical goods have been updated in line with current healthcare legislation.
Cash payments.
Provisions have been introduced restricting input VAT recovery on certain cash transactions. When assessing such transactions, the applicable conditions and the relevant regulatory decisions must be taken into account.
Input VAT apportionment.
Changes have been made to the input tax apportionment methodology for companies that make both taxable and VAT-exempt supplies.
The new apportionment rules will apply from the first tax year beginning after 1 October 2027.
Why does this matter?
The changes are particularly relevant for companies with mixed activities and for organisations with significant staff costs.
5. Electronic invoicing: the mandatory transition begins in 2027
One of the most far-reaching changes in UAE tax administration is the introduction of a national electronic invoicing (e-invoicing) system.
It is important to understand that an electronic invoice is not a PDF sent by email.
The new system involves creating and exchanging structured electronic documents through Accredited Service Providers (ASPs).
It is built on a data exchange model that allows tax information to be transmitted to the FTA.
The new requirements apply primarily to business-to-business (B2B) and business-to-government (B2G) transactions, subject to specified exclusions.
Mandatory implementation timeline:
Companies with annual revenue of AED 50 million or more:
- Appointment of an Accredited Service Provider — by 30 October 2026.
- Mandatory e-invoicing — from 1 January 2027.
Companies with annual revenue below AED 50 million:
- Appointment of a service provider — by 31 March 2027.
- Mandatory implementation — from 1 July 2027.
Government entities:
- Appointment of a service provider — by 31 March 2027.
- Mandatory implementation — from 1 October 2027.
Large companies were originally required to appoint an ASP by 31 July 2026, but the Ministry of Finance extended this deadline to 30 October 2026.
The mandatory implementation date for the first group of companies, however, remains unchanged.
What does this mean for businesses?
Companies will need to:
— choose an accredited e-invoicing operator;
— check that their existing accounting system is compatible with e-invoicing;
— make sure customers' and suppliers' tax data is accurate;
— set up electronic document exchange;
— review internal processes for issuing, receiving and storing invoices.
Moving to e-invoicing is not just an accounting software update. It affects the entire process of documenting commercial transactions, from creating an invoice to reporting it in the tax return.
6. New accreditation rules for e-invoicing operators
On 9 October 2026, the Ministry of Finance announced the adoption of Ministerial Decision No. 168 of 2026.
The decision introduces an updated accreditation procedure for e-invoicing service providers and applies from 1 October 2026.
It replaces Ministerial Decision No. 64 of 2025 and its subsequent amendments.
What has changed?
The previous pre-approval system for operators has been replaced by a direct accreditation procedure.
Service providers must pass the prescribed checks of technical readiness, compliance with the requirements and the operability of their solutions.
It remains possible to use certain technology solutions from third-party vendors, but responsibility for compliance rests with the accredited operator.
Why does this matter for companies?
When choosing an ASP, it is not enough to assess only the cost of the service or how well it integrates with your accounting system.
You need to check the operator's current accreditation status and whether its solutions comply with the Ministry of Finance's requirements.
This is particularly pressing for first-wave companies: the deadline for appointing a service provider expires on 30 October 2026.
7. New FTA guidance: imports, the Reverse Charge and applying the amendments
Throughout 2026, the Federal Tax Authority has continued to publish guidance to help businesses apply the updated legislation in practice.
Among the most recent documents, the following deserve particular attention.
VATP045 — Concerned Goods: Tax Invoices and Input Tax Recovery
This public clarification of 26 August 2026 deals with tax invoices and the conditions for recovering input VAT on certain categories of goods (Concerned Goods).
It is important for companies that deal in such goods and apply the relevant reverse charge rules.
Clarification on the amendments to the VAT law of 4 September 2026
The FTA explained how to apply the changes introduced by Federal Decree-Laws No. 16 of 2024 and No. 16 of 2025.
The document covers the new legislative provisions and their practical application, including the requirements for documents and input tax recovery.
VATP047 — Reverse Charge Mechanism for trade in scrap metal
On 2 October 2026, the FTA published a clarification on applying the reverse charge mechanism to trade in scrap metal between VAT-registered businesses in the UAE.
For companies in this sector, the document helps determine how to account for these transactions for tax purposes and meet the legal requirements.
Why does this matter?
The FTA's public clarifications help you understand how the tax authority interprets the legislation and what approaches it expects from taxpayers.
Companies are advised to take the latest clarifications into account when developing internal accounting procedures and preparing tax returns.
What should companies check right now?
The changes in 2026 show the overall direction of UAE tax regulation: more attention to whether business transactions are genuine, to the transparency of document flow and to substantiating the right to tax recovery.
We recommend that businesses focus on four areas.
1. Counterparty verification
Assess your current due diligence procedures and make sure the company can document that its transactions are genuine and its suppliers act in good faith.
2. Input VAT
Review how input tax recovery is claimed, especially for employee expenses, composite supplies and higher-risk transactions.
3. Electronic invoicing
Establish your mandatory e-invoicing date, check that your accounting software is ready and choose a suitable Accredited Service Provider.
4. Tax documentation and reporting
Make sure your internal procedures reflect the latest legislative changes, FTA decisions and published clarifications.
Mistakes in these areas can lead to denied input VAT recovery, additional tax assessments, administrative penalties and disputes with the tax authorities.
The main takeaway: the 2026 tax changes affect not only how VAT is calculated but the way a business is organised as a whole — from choosing suppliers to preparing primary documents and filing returns.
Current as at 14 October 2026. Prepared on the basis of official publications by the UAE Ministry of Finance and the Federal Tax Authority.
