A UAE business generally cannot reclaim VAT on entertainment expenses — input tax on entertainment services is blocked under Article 53 of the VAT Executive Regulations, for entertainment provided to anyone not employed by the business. Incidental costs such as tea, coffee and snacks in a normal business meeting are the exception and stay recoverable.
TL;DR
- Input VAT on entertainment services is blocked under Article 53 of Cabinet Decision No. 52 of 2017.
- The block covers entertainment provided to customers, potential customers, officials, shareholders — anyone not employed by the business.
- Entertainment means 'hospitality of any kind' — accommodation, food and drink outside a normal meeting, shows and trips for pleasure.
- Simple hospitality in the normal course of a business meeting — tea, coffee, snacks — stays recoverable.
- Cabinet Decision No. 149 of 2026 rewrote Article 53(1)(c) for employee goods and services; entertainment for non-employees stays fully blocked.
Can a UAE business claim VAT on entertainment expenses?
No — input tax on entertainment services is non-recoverable under Article 53 of Cabinet Decision No. 52 of 2017, the Executive Regulation of Federal Decree-Law No. 8 of 2017. The FTA's Non-recoverable Input Tax – Entertainment Services public clarification (VATP005) confirms the block applies to entertainment provided to anyone who is not an employee — customers, potential customers, officials, shareholders and other owners.
| Expense | Input VAT recovery in 2026 | Governing rule |
|---|---|---|
| Entertainment for customers or potential customers | Blocked — non-recoverable in full | Article 53(1)(a), VAT Executive Regulation |
| Entertainment for shareholders or owners | Blocked | Article 53(1)(a) |
| Food and drink in the normal course of a business meeting | Recoverable, subject to normal recovery rules | FTA VATP005 |
| Employee entertainment, e.g. staff parties | Blocked unless a charge is made to the employee | Article 53(1)(b) and FTA VATP005 |
| Tea, coffee, snacks available in the office for free | Recoverable — sundry office expenses | FTA VATP005 |
What counts as entertainment under Article 53
Article 53(2) defines entertainment services as "hospitality of any kind", including: accommodation; food and drink that are not provided in the normal course of a meeting; and access to shows, events or trips provided for the purposes of pleasure or entertainment.
The FTA's public clarification draws the line with a purpose test: hospitality that is incidental to a genuine business purpose is recoverable, but once the hospitality becomes an end in itself — something that would attract attendance on its own — it is entertainment and the input tax is blocked.
The blocked categories apply in full even to a business that makes only taxable supplies and would otherwise recover input tax in full.
The exception: simple hospitality in a normal business meeting
The FTA's VATP005 lists the indicators of simple hospitality recoverable in the normal course of a business meeting: it is provided at the same venue as the meeting; the meeting is interrupted only by a short break and then resumes as normal; the cost per head stays within the business's own subsistence policy where one exists; and the food and drink are not accompanied by entertainment such as a speaker or a live band.
Where hospitality is substantial enough to be an end in itself — a gala dinner with a short introduction from a speaker, for example — the input tax is blocked even if a meeting is attached to it.
What Cabinet Decision No. 149 of 2026 changes
Cabinet Decision No. 149 of 2026 (full text, published 1 September 2026, effective 1 October 2026) rewrites Article 53(1)(c) sub-clauses 1 and 2, which govern when goods or services provided to employees stay recoverable: where the provision is mandatory under applicable labour law, or where it is a contractual obligation or documented policy, in the cases and conditions the FTA specifies.
The amendment does not loosen the entertainment block for non-employees. Entertainment provided to customers, potential customers, officials or shareholders stays fully blocked under Article 53(1)(a) after 1 October 2026.
What to do at your next VAT return
Code entertainment-type invoices into a separate ledger account so the Article 53 add-back is a one-line adjustment at each filing. Where the business cannot establish, or is uncertain, whether hospitality was provided in the normal course of a business meeting, the FTA's position is that input tax should not be recovered. Employee expenses that are genuinely business costs — a hotel on a domestic business trip, subsistence bought by the employee on that trip — remain recoverable with a valid tax invoice, and the VAT on employee expenses guide covers that boundary in detail.
FAQ
Can a UAE business claim VAT on entertainment expenses in 2026?
No — input tax on entertainment services is blocked under Article 53 of Cabinet Decision No. 52 of 2017, for entertainment provided to anyone not employed by the business.
Can I reclaim VAT on a client dinner?
No. Entertainment provided to customers or potential customers is non-recoverable in full under Article 53(1)(a), per the FTA's VATP005 public clarification.
Is VAT recoverable on food and drinks during a business meeting?
Yes, when it is simple hospitality in the normal course of the meeting — same venue, short break, no entertainment attached. Substantial hospitality that is an end in itself is blocked.
Can employees' party costs be claimed?
No — VAT on staff parties and employee entertainment is blocked unless the employee is charged for attending, under Article 53(1)(b) and the FTA's VATP005 guidance.
What changed in the Article 53 rules from 1 October 2026?
Cabinet Decision No. 149 of 2026 rewrote the employee-provision conditions in Article 53(1)(c). The entertainment block for non-employees is unchanged.
What if I'm not sure whether hospitality counts as entertainment?
The FTA's position is to refrain from recovering the input tax where the business cannot establish it was in the normal course of a business meeting.
