FTA Decision No. 17 of 2026 – Recovery of Input VAT on Employee-Related Expenses
by Reina Consulting | Sep 29, 2026
The Federal Tax Authority (“FTA”) has issued Decision No. 17 of 2026 (effective from 1 October 2026), setting out conditions under which Input VAT can be recovered on goods or services which are to be used by employees without any charge. The key aspects of the Decision are summarised below:
| Expense/ Benefit |
Conditions for Input VAT Recovery |
| Employee Transport |
- It is provided only between home and office/client location, or any other purposes directly related to performance of job duties
- Not used for the employee’s personal benefit
- Employee doesn’t receive a cash allowance/ any financial compensation in lieu of the transportation service
|
| Food & Beverages |
- Employee’s place of residence is remote, distant or in isolated area
- No appropriate food facility is reasonably available nearby
- Directly linked to the work period or residence period required due to the job
- Employee doesn’t opt to receive a cash allowance in lieu of the food and beverages provided
|
| Employee Accommodation |
- Employee doesn’t opt to receive a cash allowance or financial compensation in lieu of accommodation provided
- Related to operational requirements of work and does not form part of the employee’s benefits or ordinary compensation arrangement
- Nature/ work requirements of the work necessitate that the employee resides near the workplace, the work site, or the client’s location
- Designed exclusively for residence (excluding residence of family members/ other personal use), except where the employee is required to reside permanently near the workplace
- Commensurate with the job requirements and the basic residency needs (i.e., does not include significant recreational or personal elements)
|
| New Employee Accommodation |
- Temporary accommodation provided upto 30 days
- Commensurate with the job requirements and the basic residency needs
|
| Mobile, Internet & Data |
- Necessary to perform job duties (including outside normal working hours or remote locations)
- Limited to work purposes and personal use is incidental and insignificant
- Documented internal policy regulating use of goods/ services (including scope of permissible use and consequences of any unauthorised use)
- Employer demonstrates reasonable monitoring mechanisms to track the usage and employees’ compliance thereof
|
| Employee Parking |
- Incurred solely for business/work purposes and directly related to duties
- A documented parking policy is in place regulating where employees may be reimbursed along with mechanism thereof
- Documents establishing payment of parking fees are retained
|
Businesses should review their employee policies, supporting documents and record-keeping requirements before claiming input VAT on Employee related expenses.
Please click here to download the VAT Decision
