From 1 October 2026, UAE VAT-registered businesses must apply new supplier and supply verification measures before deducting Input Tax, subject to the exceptions in Federal Tax Authority Decision No. 13 of 2026. The Decision sets out the procedures for verifying the validity and integrity of supplies before Input Tax is deducted.
The Decision adds a verification layer to the existing conditions for UAE input VAT recovery. Holding a valid Tax Invoice, where required, does not by itself demonstrate that the new verification measures have been satisfied.
This article outlines how FTA Decision No. 13 of 2026 affects Input Tax deduction, which checks apply and what finance and procurement teams should review before the effective date.
What FTA Decision No. 13 of 2026 Changes for UAE Input VAT Recovery
FTA Decision No. 13 of 2026 was issued for the purposes of Article 54(bis) of the UAE VAT Law. Article 54(bis) allows the FTA to reject Recoverable Input Tax where it establishes that a supply formed part of a supply or supply chain related to Tax Evasion and the Taxable Person knew, or should have known, of that connection.
A Taxable Person is considered to have been required to be aware of such a connection where the validity and integrity of the supplies were not verified before Input Tax was deducted. Decision No. 13 sets out the measures, procedures and conditions for carrying out that verification.
FTA Public Clarification VATP046 also confirms that the relevant supply chain is not limited to direct suppliers and customers and may include any Person involved in the wider supply chain related to Tax Evasion.
The Decision does not replace the existing conditions for Input Tax recovery or guarantee recovery where its procedures are followed.
Operationally, the requirements can be viewed across three levels: supplier verification, additional checks where specified supplier-value thresholds are met, and verification of each Taxable Supply. This distinction is relevant because completing supplier onboarding checks does not remove the need to assess individual transactions.
Supplier Verification Requirements
Where the measures apply, businesses must verify a supplier before the first supply is made. For recurring dealings, verification must be repeated where the supplier has not been verified during the previous 12 months.
For a natural-person supplier, the Taxable Person must obtain valid proof of identity, such as an Emirates ID or passport, and meet the supplier in person or virtually before the supply is made.
For a legal-person supplier, the Taxable Person must:
- verify incorporation through official databases or obtain a copy of the certificate of incorporation and confirm that the details are valid and consistent with other supplier information; and
- verify the identity of the director, agent or employee authorised to represent the supplier and obtain valid proof of identity.
Supplier Address and Risk Checks
The Taxable Person must also verify the supplier’s address and place of business. This includes confirming that an actual place of business exists through appropriate electronic means or a field visit and that the location is compatible with the supplier’s activities.
The Decision identifies three supplier risk indicators:
- the supplier changed its address more than twice during the previous 12 months;
- the supplier changed key employees, including managers or persons dealing with the Taxable Person, more than twice during the previous 12 months; or
- the supplier undertook commercial transactions that are disproportionate or unexpected in volume, value or nature compared with the size and history of its business.
Where an indicator applies, the business must retain a clear and justified explanation and provide it to the FTA if requested. The explanation should be consistent with the evidence and information available to the Taxable Person.
Key Supplier Verification Thresholds
Three monetary thresholds determine when different verification requirements or exceptions apply.
| Threshold | When it applies | Effect |
| Less than AED 10,000 | Individual Taxable Supply below AED 10,000 excluding VAT | Verification measures may be disregarded, subject to the AED 100,000 supplier condition |
| More than AED 100,000 | Supplier-level supplies exceed or are expected to exceed AED 100,000 over the relevant 12-month periods | Low-value exception unavailable |
| More than AED 375,000 | Supplier-level supplies exceed or are expected to exceed AED 375,000 over the relevant 12-month periods | Additional verification applies |
Where the AED 375,000 test is met, the Taxable Person must obtain written confirmation from an authorised bank in the UAE confirming that the supplier has a bank account, provided the confirmation does not contain relevant reservations or conditions.
The business must also review client recommendations where available and assess publicly available reviews and media coverage from reliable sources. The assessment should consider whether the information is consistent with the nature and size of the supplier’s business and whether there are indicators of suspected Tax Evasion.
What Must Be Verified for Each Taxable Supply
Supplier-level checks operate alongside verification of each Taxable Supply received or accepted.
Before deducting Input Tax, the Taxable Person must verify matters including:
- the genuine commercial reason for the transaction and the supplier’s involvement;
- the payment method and conditions, including that Consideration is paid electronically;
- where cash is used, that there is a documented commercial reason, the payment falls within applicable Tax legislation thresholds and can be readily verified;
- where a third party is involved in payment, or payment is made to an account outside the supplier’s country of incorporation, that there is a reasonable commercial explanation;
- whether the price or profit margin is commercially justifiable and is not significantly different from market conditions without a clear reason;
- whether the Goods or Services are consistent with the supplier’s ordinary or licensed activities;
- for Goods, their authenticity and origin and whether the supplier owns them or has the right to dispose of them; and
- where an intermediary is involved, whether there is a clear commercial justification for its role.
These checks mean UAE VAT input tax deduction controls need to address the commercial substance and payment arrangements behind the transaction as well as supplier and invoice documentation.
Records and Internal Policies Finance Teams Should Review
FTA Decision No. 13 of 2026 requires Taxable Persons to document the verification procedures performed and retain supporting records. Businesses must also maintain a documented policy identifying the persons responsible for implementing, reviewing and supervising the procedures, together with their powers and responsibilities.
Ahead of 1 October 2026, finance and procurement teams should review whether existing processes capture:
- supplier identity, incorporation, address and place-of-business checks;
- supplier risk indicators and supporting explanations where applicable;
- monitoring of the AED 375,000 additional-check threshold and AED 100,000 limit on the low-value exception;
- bank confirmations and reliable public-source checks where required;
- payment approvals and commercial explanations for cash, third-party or overseas payment arrangements; and
- responsibility for verification, review, supervision and record retention.
The evidence supporting Input Tax deduction may sit across procurement, accounts payable and tax functions. Businesses therefore need a documented process that identifies which checks are completed, who reviews them and where the supporting evidence is retained before Input Tax is deducted.
Conclusion
FTA Decision No. 13 of 2026 introduces a defined supplier and supply verification framework from 1 October 2026. For UAE input VAT recovery, businesses must consider these requirements alongside the existing conditions for Input Tax deduction under the UAE VAT Law. Finance and procurement teams should ensure that applicable verification procedures and supporting evidence form part of normal purchasing and VAT controls before Input Tax is deducted.
About SimplySolved
As a UAE FTA Approved Tax Agency with ISO 9001, ISO 27001 and ISO 42001 certifications, SimplySolved supports businesses through its VAT compliance and reporting services.
Support may include reviewing supplier onboarding and verification procedures, assessing when the AED 375,000 additional verification requirements and AED 100,000 exception limit apply, and helping finance teams prepare documented policies and supporting processes under FTA Decision No. 13 of 2026.
This article is provided for general informational purposes only and should not be relied upon as binding tax, legal, accounting or financial advice. Professional advice should be obtained based on the specific circumstances of the business and UAE legislation in force at the relevant time.
