Starting 1 October 2026, UAE businesses will need documented proof that they checked their suppliers and the supplies they received before claiming VAT input tax. This requirement comes from Federal Tax Authority Decision No. 13 of 2026, issued on 22 July 2026, which sets out exactly how taxable persons must verify supplier identity, business legitimacy, and transaction integrity under Article 54(bis) of the VAT Law.
If your business claims input VAT on goods or services from third-party suppliers, this decision changes how you should be handling supplier onboarding, invoice review, and payment processes. Here is what the decision requires, who it affects, and how to prepare before it takes effect.
Why This Decision Exists
Federal Decree-Law No. 16 of 2025 amended the VAT Law and inserted Article 54(bis), giving the FTA the power to deny input tax recovery where a supply forms part of a chain connected to tax evasion, and the recipient knew, or should reasonably have known, about it. That amendment took effect on 1 January 2026.
The problem it left open was practical: what does “should have known” actually mean for a business trying to claim input tax in good faith? FTA Decision No. 13 of 2026 answers that question. It sets out the specific measures, procedures, and conditions a taxable person must follow to show they exercised reasonable care before deducting input tax on a supply.
In short, the burden of proof has shifted. Holding a valid tax invoice is no longer automatically enough to secure input tax recovery. Businesses now need to show they actively checked who they were dealing with.
Who Must Comply
The decision applies to every taxable person under the VAT Law – meaning any business registered, or required to be registered, for VAT in the UAE. It applies specifically to the verification of supplies received before deducting input tax on them, as set out under Article 2 of the decision.
There is no exemption by business size or sector. However, as covered below, the decision does build in monetary thresholds that reduce the compliance burden for smaller, lower-value transactions.
The Two Levels of Verification
Decision No. 13 of 2026 organises its requirements into two distinct checks: verifying the supplier and verifying the supply. Both need to happen, and both need to be documented.
1. Supplier Verification (Article 3)
Before relying on input tax from a new supplier – or an existing one not checked in the past 12 months – a business must confirm:
- Identity. For an individual supplier, a copy of a valid Emirates ID or passport, plus an in-person or virtual meeting before the supply is made. For a company, verified incorporation details matched against official databases or a certificate of incorporation, along with identity documents for the authorised representative dealing with your business.
- Address and place of business. Confirmation, through electronic checks or a site visit, that the supplier has a genuine place of business consistent with the nature of its activities.
- Risk indicators. A check that the supplier has not changed address or key personnel more than twice in the past 12 months, and that its transaction volumes are proportionate to its size and history. If a red flag applies, the business must keep a documented, justified explanation on file.
- Bank account confirmation and reputation check, but only where supplies received from that supplier exceed, or are expected to exceed, AED 375,000 in 12 months. This requires a written bank confirmation and a review of publicly available information about the supplier.
2. Supply Verification (Article 4)
For each taxable supply received, a business must additionally check:
- The transaction has a genuine commercial rationale, not just paperwork.
- Payment terms are commercially justifiable – third-party payments or payments to accounts outside the supplier’s home country need a documented explanation.
- Payments are made electronically where possible; cash payments need a clear commercial reason and must stay within legal thresholds.
- Prices and profit margins are not unexplainably out of line with the market.
- The goods or services fall within the supplier’s normal licensed activity.
- The origin and ownership of goods received can be verified.
- Where a supplier is acting as an intermediary, there is a clear commercial reason for their role in the chain.
The Monetary Thresholds That Matter
Three figures in the decision determine how much verification work is actually required:
Threshold | What it triggers |
|---|---|
AED 10,000 | Below this value (excluding VAT) per supply, a business may skip the verification measures entirely |
AED 100,000 | If total supplies from one supplier exceed this over 12 months (past or expected), the AED 10,000 exception no longer applies – full verification is required regardless of individual invoice size |
AED 375,000 | Above this cumulative supplier value over 12 months, the additional bank account confirmation and reputation review under Article 3(4) also apply |
This structure means low-value, occasional purchases carry a light compliance load, while recurring or higher-value supplier relationships require full documentation.
Documentation and Governance Requirements (Article 5)
The decision does not just ask businesses to perform checks – it requires proof that they were performed. Under Article 5, taxable persons must:
- Verify each supplier the first time they deal with them, and again if 12 months have passed since the last check.
- Verify every taxable supply received under the Article 4 criteria.
- Retain supporting documents and records showing how each verification step was carried out, in a form the FTA can review.
- Maintain a written policy naming the people responsible for running, reviewing, and supervising the verification process, with their roles clearly defined.
This last point matters for internal accountability. The FTA is not just asking whether checks happened – it wants a named, documented process behind them.
Key Dates
- 23 June 2026 – Approved by the FTA Board of Directors
- 22 July 2026 – Decision issued
- 1 October 2026 – Decision takes effect
That leaves a narrow window for businesses to build the required checks into their supplier onboarding and accounts payable workflows before enforcement begins.
What This Means in Practice
For most finance teams, this decision turns supplier due diligence from a best practice into a documented legal requirement tied directly to input tax recovery. A few practical shifts to expect:
- Procurement and AP teams will need a formal supplier onboarding checklist covering identity documents, incorporation checks, and address verification, not just a bank-detail form.
- Existing supplier files will need a review. Any supplier not verified in the past 12 months, or crossing the AED 100,000 or AED 375,000 thresholds, needs fresh documentation before 1 October 2026.
- Cash payments will come under more scrutiny. Businesses that pay suppliers in cash should expect to justify and document that decision going forward.
- A named compliance owner is now expected. The written policy requirement under Article 5(4) means someone in the business needs to own this process formally.
A Readiness Checklist Before 1 October 2026
- List all active suppliers and flag which ones exceed the AED 100,000 or AED 375,000 rolling 12-month thresholds.
- Collect or refresh identity and incorporation documents for flagged suppliers.
- Confirm each supplier’s place of business is consistent with their invoiced activity.
- Review payment methods and flag any cash or third-party payment arrangements that need a documented rationale.
- Draft a written verification policy naming the responsible team or individual.
- Brief procurement and accounts payable staff on the new documentation requirements
- Build a retention system for verification records that the FTA can review on request.
Frequently Asked Questions
What is FTA Decision No. 13 of 2026?
It is a Federal Tax Authority decision, issued on 22 July 2026, that sets out the specific measures UAE businesses must follow to verify suppliers and supplies before deducting input VAT. It implements Article 54(bis) of the VAT Law, effective 1 October 2026.
When does FTA Decision No. 13 of 2026 take effect?
The decision takes effect on 1 October 2026, as confirmed in Article 7 of the decision.
Does this decision apply to all UAE VAT-registered businesses?
Yes. It applies to any taxable person under the VAT Law in relation to supplies they receive before deducting input tax. However, the depth of verification required depends on the AED 10,000, AED 100,000, and AED 375,000 thresholds set out in the decision.
Do I need to verify every single supplier invoice?
Not necessarily. Supplies below AED 10,000 (excluding VAT) are generally exempt from the verification measures, unless total supplies from that same supplier exceed AED 100,000 over 12 months, in which case full verification applies regardless of individual invoice size.
What happens if a business does not comply with Decision No. 13 of 2026?
The decision itself sets out due diligence requirements rather than penalties directly. However, failing to verify suppliers and supplies as required means a business risks being treated as having “known or should have known” about a tax evasion link under Article 54(bis) of the VAT Law, which can result in the FTA denying input tax recovery on the related supplies.
How often do I need to re-verify an existing supplier?
Supplier verification under Article 3 must be repeated if more than 12 months have passed since the supplier was last verified, even for an ongoing business relationship.
Is a valid tax invoice still enough to claim input VAT?
A valid tax invoice remains a basic requirement, but it is no longer sufficient on its own. Under the new rules, businesses also need documented evidence that they verified the supplier and the supply in line with Decision No. 13 of 2026.
Get Ahead of the 1 October 2026 Deadline
Building a compliant supplier and supply verification process from scratch – and applying it retroactively across an existing supplier base – takes time most finance teams don’t have to spare before the effective date.
NR Doshi & Partners‘ VAT advisory team can review your current supplier documentation, help you build the required verification policy, and identify which suppliers need immediate attention based on the AED 100,000 and AED 375,000 thresholds. Get in touch with our VAT advisory team to start your readiness review.
Author:
This article is prepared by the VAT advisory team at NR Doshi & Partners, an FTA-approved, DFK International member chartered accountancy and business advisory firm established in 1985, with offices across the UAE.
