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June 1, 2026 – A Small Rate Change with Big Accounting and Tax Implications

From today, the VAT landscape in the UAE just shifted. Effective June 1, 2026, the Federal Tax Authority has extended the standard 5% VAT to Salik toll charges and parking fees across Dubai and other emirates.

This is not just a compliance requirement. For CFOs, finance managers, and business owners, it creates chart-of-accounts problems, tax deductibility questions, and cash flow timing issues all at once.

If you have been treating Salik and parking as non-VATable expenses, today is the day that assumption breaks.

What Changed

Starting June 1:

• Dubai Salik: 5% VAT now applied
• Abu Dhabi Salik: 5% VAT now applies
• Parking fees: 5% VAT across all emirates
• Effect: Monthly transport costs just rose 5%

Three Scenarios and VAT Recovery Rights

Scenario 1: Business Use (100% Recovery)

You are a logistics company. Your fleet uses Salik daily. VAT treatment: 100% VAT-deductible. Action: Claim full 5% input tax in VAT returns. Request VAT invoices from Salik. Keep records.

Scenario 2: Mixed Use (Partial Recovery)

You are a professional services firm. Managers drive to client sites (business) and commute home to office (personal). VAT treatment: Recover only the business-use portion. Action: Maintain log of Salik by vehicle and trip purpose. Document allocation basis.

Scenario 3: Personal Use (0% Recovery)

You are a sole trader using Salik to commute home to business premises. VAT treatment: Personal commuting costs. Non-deductible. Action: Do not claim. Reimburse from personal funds.

Accounting Implication: Chart of Accounts Update

You now need to separate Salik and parking by VAT recovery status in your chart of accounts.

The Cash Flow Timing Issue

Salik charges debit immediately, but VAT recovery lags. For logistics and consulting firms with high Salik spend, this creates working capital drag. Plan accordingly.

FTA Compliance Expectations

Tax audit risk is medium-to-high. Expect questions on VAT recovery basis, input documentation, use allocation, and prior-year corrections.

Action Checklist

This week (by June 7): Verify VAT invoices. Separate Salik and parking expenses by business vs. personal use. Update chart of accounts. Brief expense team on reimbursement protocols.

Before next VAT return (due July 20): Review June costs and categorize by VAT treatment. Document recovery rationale. File early if excess input tax.

Ongoing (July onwards): Request monthly VAT invoices. Reconcile Salik transactions. Monitor FTA guidance.

The Bigger Picture

This change is part of the FTA’s broadening of the VAT tax base. The trajectory is clear: exemptions are shrinking, compliance is tightening, documentation is critical.

Bottom line: Salik and parking are now material VAT accounts requiring proper classification, input recovery documentation, and audit-ready support. Start today.

FSH Financial Consultants FZE helps UAE businesses navigate VAT compliance. If your VAT treatment of Salik, parking, or other transport costs needs review, reach out: info@fshconsultants.com or call +971 55 678 53 51