FTA Decision 17/2026 sets conditions for VAT recovery on employee expenses
Taxable Persons may recover or deduct Input Tax incurred when purchasing Goods or Services to be used by employees for no charge to them, in accordance with the following cases
The analysis — automated & source-checked
- Applies to
- Tax · UAE
- What to do
- Taxable persons must ensure they meet all specified conditions before claiming input tax recovery on employee expenses. Employers must implement documented policies, establish monitoring mechanisms where required, and maintain supporting documentation. The decision becomes effective on 1 October 2026.
The Federal Tax Authority has issued Decision No. 17 of 2026, effective from 1 October 2026, which establishes the cases and conditions under which taxable persons may recover or deduct input tax on employee expenses.
The decision applies to input tax incurred on purchases of goods or services provided to employees at no charge, where there is a contractual obligation or documented policy.
Recoverable expenses include: - Employee transportation (between residence and workplace or for job-related purposes, non-personal use only) - Food and beverages (in remote areas where facilities are unavailable, linked to work requirements) - Accommodation (where operationally necessary and designated exclusively for the employee) - Temporary accommodation for new employees (up to 30 days) - Mobile phones, airtime, data, and internet (necessary for job performance with documented use policies) - Parking fees (for business purposes with documented internal policies)
Each category has specific conditions that must be met. For example, employees must not be able to opt for cash allowances in lieu of transportation, food, or accommodation services. Employers must implement documented policies and maintain appropriate records.
Source
Source: FTA Legislation — official 28 Sept 2026 Read the original ↗ More from FTA Legislation →
Quick answers
What do I need to do?
Taxable persons must ensure they meet all specified conditions before claiming input tax recovery on employee expenses. Employers must implement documented policies, establish monitoring mechanisms where required, and maintain supporting documentation. The decision becomes effective on 1 October 2026.
What was the deadline?
1 Oct 2026 — this deadline has passed.
Who issued this?
FTA Legislation (UAE).
When was it announced?
28 Sept 2026.
Where can I read the original?
Read the original at FTA Legislation: https://tax.gov.ae//Datafolder/Files/Pdf/2026/legislation/FTA%20Decision%20No.%2017%20of%202026%20on%20the%20Cases%20and%20Conditions%20for%20the%20Recovery%20of%20Input%20Tax%20Incurred%20on%20Employee%20Expenses%20-%20Publishing.pdf
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