UAE FTA Issues New VAT Method for Deemed Supply Valuation

The UAE FTA issued Directive No. 5 of 2026 to standardize how the value of deemed supplies of services is calculated under Article 37 of the UAE VAT Law.
Deemed supplies cover services used outside normal business activity, such as free services to related parties, staff, or for non-business purposes, after input VAT was already recovered.
The Directive replaces prior ambiguity with a four-step backward method starting from Open Market Value, then removing profit, isolating VAT-bearing costs, and applying the final cost ratio.
The resulting taxable value is then subject to the standard 5% UAE VAT rate.

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.