Since 1 October 2026, UAE businesses can recover input VAT on six specific types of free employee benefits, as long as strict conditions are met. The Federal Tax Authority (FTA) issued Decision No. 17 of 2026 on 9 September 2026 to settle a grey area that has caused many VAT refund disputes: when is VAT on staff transport, meals, housing, phones and parking really recoverable?
For finance teams, the answer is yes in defined cases, but only with the right policy, evidence and structure in place. This guide explains what the decision says and what to do before your next VAT return.
What the decision covers
The decision applies when a taxable person buys goods or services that employees use at no charge to them, and there is a contractual obligation or a documented policy to provide them. It implements Article 53(1)(c)(2) of Cabinet Decision No. 52 of 2017 (the VAT Executive Regulation). If the benefit is not written into a contract or policy, or the employee pays for it, this decision is not your route to recovery. Each of the six cases below has its own conditions, and all conditions in a case must be met.
The six recoverable cases
1. Employee transportation: transport is only between home and work, to client premises, or for other purposes directly tied to job duties; it is not used for the employee's personal benefit; and the employee cannot choose a cash allowance instead.
2. Food and beverages: the employee lives in a remote, distant or isolated area; there are no suitable food preparation facilities at the residence or workplace and no nearby restaurants; the food is directly linked to the work or residence period the job requires; and the employee cannot opt for a cash allowance instead.
3. Accommodation for employees: the employee cannot take a cash allowance instead; it meets operational needs and is not part of normal benefits or compensation; the job requires living near the workplace, work site or client location; it is for that employee only, unless the employee must live permanently near the workplace; and it is sized for job requirements and basic needs, with no significant recreational or personal features.
4. Temporary accommodation for new hires: it lasts no longer than 30 days and is commensurate with job requirements and basic residency needs.
5. Mobile phones, airtime, data and home internet: the items are necessary to do the job, including outside normal hours or when working remotely; use is for work and any personal use is incidental and insignificant; the employer has a documented internal policy on permitted use and the consequences of misuse; and the employer can show reasonable monitoring and keeps records where unauthorised use occurs.
6. Parking fees: fees are incurred solely for business purposes tied to job duties or business visits; a documented policy sets when parking is reimbursed and how it is approved; and proof of payment is kept showing date, time, amount and the tax paid.
Your compliance checklist
Put every employee benefit in an employment contract or a written policy. Confirm no benefit can be swapped for cash. Write a mobile, data and internet use policy and set up reasonable monitoring. Write a parking reimbursement policy with an approval process and keep receipts. Document why remote-area food or on-site housing is needed. Check accommodation for personal elements such as family occupancy or recreational fixtures. Track the 30-day limit on new-hire housing. Review VAT returns filed from 1 October 2026 against these rules.
Common pitfalls
The most likely errors are offering a cash allowance alongside the benefit, relying on an informal understanding instead of a written policy, and claiming VAT on meals or housing without showing the remote-location or job-necessity test. Another is letting phone or internet use drift into personal use with no monitoring. The decision lists specific cases, so benefits outside the six are not covered by it.
How Fintrack can help
Fintrack reviews employee benefit policies, checks past and current VAT returns for exposure, and sets up the documentation the FTA expects. Contact our team before your next VAT filing to make sure your recoveries are defensible.
This article is general information based on an unofficial translation of FTA Decision No. 17 of 2026. It is not legal or tax advice. Check the official text and your own facts before acting.
