Petty cash: what it means for UAE businesses.

What petty cash means

Also called: Cash float, Imprest.

Petty cash is a small amount of cash kept on the premises for minor expenses such as stationery, courier fees, parking and small repairs. Most businesses run it on the imprest system: a fixed float is topped up by exactly the amount spent, supported by vouchers and receipts, so the cash plus receipts always equals the float.

Small amounts do not mean looser rules in the UAE. The Tax Procedures Executive Regulation requires records of payments and the documents behind them, and the VAT Law allows input tax to be recovered only with a valid tax invoice. For purchases of AED 10,000 or less from a registered supplier, a simplified tax invoice showing the supplier's Tax Registration Number, the total and the VAT is enough. Without it, the VAT is a cost.

Petty cash is also where Corporate Tax adjustments hide. Traffic fines are not deductible, client entertainment is only 50% deductible, and personal spending by owners is not a business expense. From 1 October 2026, the VAT Executive Regulation also blocks input tax on supplies paid in cash above a threshold the Minister of Finance will set, so larger purchases belong on a bank transfer or card.

How it works

• A fixed float, for example AED 3,000, is held by one named custodian.
• Each payment is recorded on a voucher with the date, purpose, amount and approval, with the supplier's receipt or tax invoice attached.
• At each top-up or month end, receipts are posted by expense type, with recoverable VAT posted separately as input tax.
• Items with special Corporate Tax treatment, such as fines under Article 33 and entertainment under Article 32, are coded to their own accounts.
• Surprise counts reconcile cash plus vouchers to the float; shortages are investigated, not written off quietly.

Worked example

A Dubai marketing studio runs a petty cash float of AED 3,000. At month end it tops up the float and posts the vouchers.

Stationery, including VAT of 21 (simplified tax invoice held)	AED 441
Courier charges, including VAT of 10 (simplified tax invoice held)	AED 210
Traffic fine for a company car (no VAT)	AED 500
Total spent and top-up paid from the bank	AED 1,151
Input VAT recoverable	AED 31
Fine added back for Corporate Tax	AED 500

Posting each voucher properly recovers AED 31 of VAT and flags the AED 500 fine, which is not deductible for Corporate Tax.

Common mistakes

• Accepting receipts that do not show the supplier's TRN and VAT amount, then claiming the VAT anyway.
• Posting every petty cash spend to one sundry expense account, which hides fines and entertainment that need Corporate Tax adjustment.
• Using petty cash for large supplier payments or owner expenses, which weakens controls and, from 1 October 2026, can block input tax on cash-paid supplies above the set threshold.

The law

• Cabinet Decision No. 52 of 2017 (VAT Executive Regulation), as amended, Article 59, Clauses 2 and 5 (simplified tax invoice) and Article 54, Clause 3 (cash payments)
• Federal Decree-Law No. 8 of 2017 on Value Added Tax, as amended, Article 55 (Recovery of Recoverable Input Tax in the Tax Period)
• Federal Decree-Law No. 47 of 2022, as amended, Article 32 (Entertainment Expenditure) and Article 33, Clause 2 (fines and penalties)
• Cabinet Decision No. 74 of 2023, Executive Regulation of the Tax Procedures Law, Article 2 (Keeping Records)

Frequently asked questions

Can we claim VAT on a petty cash receipt?

Only if it is a valid tax invoice from a VAT registered supplier. For purchases of AED 10,000 or less, a simplified tax invoice showing the words Tax Invoice, the supplier's name, address and TRN, the date, a description, the total and the VAT is enough.

Is there a legal limit on the size of a petty cash float?

No UAE law sets a float size. The practical limit is control: keep it small, with one custodian and regular counts, and pay larger purchases by bank or card, especially now that cash payments above a threshold can block VAT recovery.

Related terms

Simplified tax invoice · Input tax · Blocked input tax · Bank reconciliation · General ledger. See every term in the UAE tax glossary.

For the full picture, read our guide: Bookkeeping for restaurants and cafés in Dubai: what to track every month.

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