UAE Federal Tax Authority Decision 17 of 2026 sets employee expense deduction rules

Federal Tax Authority Decision No 17 of 2026 establishes the conditions under which businesses operating in the United Arab Emirates may claim employee expense deduction for transport, food, beverages and accommodation. The instrument addresses both corporation tax and VAT treatment of these benefits. Businesses must meet defined criteria for each category to qualify for the deduction.

Transport between home and workplace#

Transport provided to employees qualifies as a deductible expense where the service is offered at no charge to the employee and operates solely between the employee's residence and workplace. Cash payments in lieu of transport are not permitted under the decision. The arrangement must carry no identifiable non-business benefit. Collection points at a reasonable distance from employee residences may be used. Where transport is pooled between two companies, the company providing the service must invoice the neighbouring company for its employees.

Food and beverage provision criteria#

Food and beverages may be provided as a deductible expense where employees live in locations sufficiently remote that returning home is impractical. The decision does not define a distance threshold for remote location status. The provision must relate to the employee's role and circumstances, including workplace or residence location. Suitable food facilities must not be available at the employee's accommodation or workplace, and local food outlets must not be reasonably accessible. Cash payments instead of food and beverages are not permitted.

Accommodation as operational necessity#

Company-provided accommodation qualifies as a deductible expense where it is an operational necessity, such as work sites in remote areas with difficult access. Accommodation must be suitable but not luxurious. The decision excludes swimming pools, expansive gardens, extensive household staff and additional reception rooms from qualifying accommodation. For new employees, accommodation may be provided and claimed as an expense for up to 30 days, provided it is not ostentatious. The 30-day provision applies to all new employees regardless of their prior residence status in the country.

Compliance obligations and effective date#

Businesses claiming employee expense deduction under these categories must ensure that no employee is charged for the service and that the benefit carries no identifiable non-business component. The decision does not address whether one non-qualifying employee affects the entire arrangement's deductibility. Federal Tax Authority Decision No 17 of 2026 is the governing instrument. Businesses must apply these thresholds to both corporation tax and VAT treatment of employee benefits.