The UAE's Federal Tax Authority has issued Decision No. 17 of 2026, setting out exactly which employee-related costs businesses can now recover VAT on. The list covers six categories: staff commuting between home and work plus work-related travel, food and beverages provided at remote sites lacking catering facilities, accommodation required for operational reasons near a worksite, temporary housing for newly hired employees for up to 30 days, work-related mobile phone and internet services, and parking incurred for business purposes.

Crucially, companies can only recover the tax component, not the full cost of the service. The authority's own example illustrates the point: if an eligible service costs Dh105, including Dh5 in VAT, only the Dh5 is recoverable, provided every condition is met. Expenses must either be written into an employment contract or paid under a documented internal company policy — cash allowances offered instead of the actual service do not qualify.

The FTA was explicit about what falls outside the rule: ordinary daily meals, cash transport or housing allowances, and any service that is primarily for an employee's personal benefit are excluded. Limited incidental personal use of a work phone or internet connection is tolerated, but nothing beyond that.

The change, in force since last month, is likely to matter most to companies with staff on remote project sites, temporary assignments, or a steady stream of new hires needing short-term housing. For finance teams across the UAE, it adds a fairly technical but financially meaningful line to how payroll-adjacent costs are structured and documented, and could shave a real amount off the total cost of recruiting and retaining workers this year.