UAE Defines Conditions for Input VAT Recovery on Employee Expenses

Summary 

• FTA Decision No. 17 of 2026 addresses input VAT recovery where employee goods or services are provided free of charge under a contractual obligation or documented policy. 

• The decision covers specified employee transportation, food and beverages, accommodation, medical insurance and other identified benefits, subject to detailed conditions. 

• Recovery depends on the business purpose, documented entitlement and absence of a cash alternative or personal-benefit character where the relevant condition requires this. 

Extended article 

The United Arab Emirates Federal Tax Authority has specified cases and conditions for recovering input VAT on certain employee-related expenses under Article 53(1)(c)(2) of the VAT Executive Regulation. The framework applies where the employer provides goods or services free of charge under a contractual obligation or documented policy. 

For employee transportation, recovery is linked to travel between the employee’s residence and workplace or client premises, or travel directly connected with job duties, provided the transport is not for personal benefit and cannot be replaced by a cash allowance or other compensation. For food and beverages, the conditions include remote, distant or isolated locations without appropriate food-preparation facilities or nearby restaurants, a direct link with the work or required residence period, and no cash alternative. Businesses should align policies, contracts, invoices and evidence with the specific FTA conditions before claiming input VAT. 

External sources: Read the UAE VAT Executive Regulation amendments | Review the UAE VAT amendment overview 

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