UAE restricts input tax recovery on large cash payments under Cabinet Decision 149

The UAE has amended its Value Added Tax (VAT) executive regulations, introducing new restrictions on input tax recovery for large cash payments in a move aimed at strengthening compliance and reducing the risk of tax evasion. The changes, announced by the Ministry of Finance, are part of a broader effort to refine the country's tax framework and align the VAT system with international best practices.

One of the most notable changes is the introduction of provisions that prevent the recovery of input tax on cash payments exceeding thresholds that will be specified in a future decision by the Minister of Finance. The amendments also seek to simplify VAT procedures and reduce uncertainty for taxpayers.

Several technical updates have been introduced across the VAT framework. These include revised provisions covering the supply and import of medical products to bring them in line with the UAE's updated healthcare legislation, as well as clarification of rules relating to employee accommodation for input tax recovery purposes. The government has also clarified how the Capital Assets Scheme should be applied and refined the methodology used for input tax apportionment.