Corporate travel is back; and more complex than ever. Whether you're sending a team to a fintech conference in Riyadh, flying sales reps across the UAE, or entertaining clients in Dubai Marina, travel and entertainment costs are a core business function; and a major source of financial leakage.
Yet many UAE companies still rely on vague, outdated travel policies; or worse, no policy at all.
- "Keep the receipts"
- "Don't overspend"
- "Submit by month-end"
These aren't policies. They're liabilities.
In this guide, we’ll help finance managers, COOs, and HR leads build a bulletproof, compliant, and modern travel & expense (T&E) policy tailored to UAE business culture and tax law; one that protects the company, supports the team, and eliminates ambiguity.
Why Your “Save the Receipt” Policy Is Failing
In the traditional model of travel expense management:
- Employees pay out of pocket
- Save paper receipts in wallets or envelopes
- Submit an Excel report at the end of the month
- Finance spends hours matching entries and receipts
This method:
- Encourages delayed reporting
- Results in lost receipts
- Compromises VAT recovery
- Creates frustration and mistrust between employees and finance
Enter Real-Time Capture
Modern systems like Pemo enable:
- OCR scanning of receipts instantly (from mobile)
- Auto-matching to card transactions
- Categorization based on merchant code
- Real-time visibility for finance teams
Why does this matter?
- You capture the right data at the moment of spend
- You eliminate backlogs and “surprise” costs
- You enforce policy automatically
A policy without tech is just a PDF. With real-time capture, it's a system.
Defining “Reasonable” Spend in Dubai
The UAE is a global business hub ; and also one of the world’s most luxurious markets.
That makes “reasonable” spend a moving target, especially for client-facing roles in sectors like real estate, tech, or consulting.
So what should you allow?
Here’s a rough benchmark of what finance teams in Dubai typically define as acceptable per category:
Category
Typical Limit (AED)
Business Lunch
100–250 per person
Client Dinner
300–500 per person
Hotel (4-star)
400–800 per night
Airport Transfer
50–150 per trip
Mileage (own car)
0.5–0.75 AED/km
Parking
Actuals with receipt
Note: Always contextualize by seniority, location, and client type. Hosting a potential investor in DIFC has different optics than a field visit in Sharjah.
Tip: Tie categories to business outcomes
Instead of just limiting spend, link it to ROI:
- Was the client closed?
- Was the hotel necessary for a same-day meeting?
- Is this expense part of a strategic initiative?
Per Diems vs. Actual Expenses
One of the biggest policy debates in UAE companies is:
Should we use per diems or reimburse actual expenses?
Let’s break it down.
Pros of Per Diems:
- Simple to administer
- Predictable budgeting
- Reduces paperwork
- Faster for employees
Cons of Per Diems:
- Hard to claim VAT
- May not reflect real costs (either too generous or too lean)
- Creates fairness issues (junior vs. senior staff)
Pros of Actuals:
- Aligned with real spend
- Eligible for VAT recovery
- Enforces receipt capture
Cons of Actuals:
- Requires admin effort
- Needs clear policy enforcement
So which model wins?
The Case for Corporate Cards over Cash Per Diems
Pemo recommends a hybrid model: Issue smart corporate cards for travel with:
- Pre-set limits (e.g. AED 1,000 for a 2-day trip)
- Category restrictions (e.g. meals, lodging, transport)
- Real-time tracking
This approach gives employees flexibility ; but within guardrails.
And for finance? It removes:
- The need for cash advances
- Out-of-policy claims
- Manual reconciliations
Improving cash flow visibility
Cash per diems mean:
- Money leaves the company upfront
- There's no link to actual usage
- Unused funds are rarely returned
Corporate cards fix this:
- You only load what’s approved
- You see spend live
- You recover unspent amounts automatically
Handling "Bleisure" (Business + Leisure)
It’s common (and healthy) for employees to combine business trips with personal time ; a weekend in Abu Dhabi after a Thursday client visit, or adding 2 days in Istanbul post-conference.
The challenge is separating business from personal ; clearly, fairly, and without awkwardness.
Best practice policies include:
- Flight splits: Company pays for a return flight at business dates/times. Any personal deviation (e.g. stopover, extended stay) is paid by the employee.
- Hotel caps: Company covers standard stay during business portion. Extra nights are covered personally.
- Transport rules: If personal travel requires additional transfers or costs, those are not reimbursed.
- Meal distinction: Meals during personal days are not eligible.
Encourage transparency ; but make it easy:
- Let employees declare bleisure dates in advance
- Have separate cards or categories for personal upgrades
- Clarify reimbursement timelines
VAT Recovery on Travel Expenses in the UAE
One of the most overlooked aspects of travel expenses is VAT reclaim.
The UAE allows registered businesses to reclaim VAT on eligible business expenses ; but only if:
- There is a valid tax invoice (with supplier TRN)
- The expense is directly related to business activity
- The business is not blocked from recovering certain expense types
What’s recoverable?
✅ Hotel accommodations (with tax invoice)
✅ Domestic transportation (e.g. Careem with invoice)
✅ Meals with clients (with clear business purpose)
What’s not?
❌ Entertainment expenses (e.g. leisure activities)
❌ Personal travel portions
❌ International VAT unless part of global VAT program
Pemo advantage:
With receipt capture + VAT tagging:
- You ensure all invoices are captured properly
- You identify non-recoverable VAT instantly
- You export clean data to your accounting system (Xero, QuickBooks)
Missed receipts = missed money. A real-time system protects your bottom line.
Checklist: What to include in your Policy Document
Whether you’re drafting your first travel policy or upgrading an old one, your document should cover:
1. Eligibility & Scope
- Who can travel
- For what purposes
- Pre-approval process
2. Booking Guidelines
- Preferred vendors (hotels, airlines, car rentals)
- Class of travel (economy vs. business)
- Advance booking requirements
3. Spending Limits
- Per diem vs. actual policy
- Category caps (e.g. AED 300/night hotel)
4. Payment Methods
- Use of corporate cards
- When cash is allowed (if ever)
- Receipt requirements
5. Bleisure & Personal Spend
- Declaration process
- Rules for combined trips
6. VAT Compliance
- Receipt standards (tax invoices)
- What is recoverable
- Non-compliant example cases
7. Reimbursement Process
- Timelines
- Systems used (e.g. Pemo mobile app)
- Dispute handling
8. Policy Enforcement
- Out-of-policy spend consequences
- Escalation for repeated violations
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Conclusion: Policies are Not about control. They're about Clarity.
The best travel policies don’t micromanage ; they empower teams to make good decisions.
With the right combination of:
- Clear rules
- Smart enforcement (via cards)
- Real-time visibility (via automation)
You create a culture of trust, accountability, and speed ; all without sacrificing compliance.
The UAE is a fast-paced, high-variance market. A modern expense policy helps your business move faster ; while protecting your finances, your tax position, and your team.
Ready to Automate Your Travel Expense Policy?
👉 See how Pemo delivers automated expense enforcement with smart cards, approvals, and real-time tracking.
👉 Book your FREE Demo today!
