Tax

UAE VAT: supplier checks mandatory from 1 October 2026

FTA Decision No. 13 of 2026 introduces a formal, documented due-diligence layer before any input VAT recovery. Three thresholds (AED 10,000 / 100,000 / 375,000) define how deeply a business must verify a supplier before claiming the credit. Article 54 bis of the VAT Law now explicitly lets the FTA disallow input VAT when checks are missing and the supply turns out to be linked to tax evasion — even if the buyer had no actual knowledge.

Marsel ShadmanovCEO and Partner, Garant Business Consultancy · banking, structuring, UAE taxation

11 October 20268 min read

Illustration for the article on the Federal Tax Authority of the United Arab Emirates Decision number thirteen of two thousand twenty-six: from the first of October two thousand twenty-six every business must verify its supplier and each individual supply before claiming input value added tax; the desk shows a stack of tax invoices, a laptop with the EmaraTax portal open, a folder with the internal supplier verification policy stamped by compliance; an accounting officer is cross-checking the supplier's trade license against the Ministry of Economy register, with a UAE bank letter confirming the counterparty's corporate account lying next to the laptop.

Common questions on this topic

When does Decision 13 of 2026 come into force?

On 1 October 2026. The Decision was approved on 23 June, issued on 22 July and published on 20 August 2026, with 1 October as the effective date. Any input VAT claimed on or after that date must be supported by documented verification of both the supplier and the specific supply.

Who is affected?

All VAT-registered taxpayers in the UAE and those required to register (annual taxable turnover above AED 375,000). If your company claims input VAT in its returns, Decision 13 applies directly to you — regardless of size or free-zone status.

What does 'supplier verification' actually mean?

Two documented checks. On the supplier: identity (trade licence, representatives), physical business premises, risk indicators such as frequent address or personnel changes, and — for suppliers above AED 375,000 a year — a UAE bank confirmation letter plus a media / reputation review. On each individual supply: a genuine commercial reason, market-consistent pricing, alignment with the supplier's licensed activity, and a preference for electronic payment over cash.

What if we skip the checks?

The FTA may disallow the input VAT credit under Article 54 bis of the VAT Law (Federal Decree-Law No. 16 of 2025). Where actual knowledge of a tax-evasion link is established, the denial becomes permanent for all affected supplies. The Decision does not introduce a stand-alone cash fine for 'no verification' — the penalty operates through the lost right to recover input tax.

How often must the same supplier be re-verified?

On first dealing and at least once every 12 months. An out-of-cycle re-check is required if the supplier changes its address or key personnel more than twice within 12 months — this is treated as a risk trigger.

What happened

The UAE Federal Tax Authority (FTA) has made it mandatory to verify a supplier before claiming any input VAT. The rule is set out in FTA Decision No. 13 of 2026: approved on 23 June, issued on 22 July, published on 20 August and in force since 1 October 2026. From that date onwards the regular conditions for recovering input VAT are no longer enough — a separate due-diligence procedure must be run and documented, ready to be shown to the FTA on audit.

Legal basis and what has changed

The Decision rests on Article 54 bis of the VAT Law, inserted by Federal Decree-Law No. 16 of 2025 (amendments to the VAT Law). This new provision explicitly allows the FTA to disallow input VAT where the supply is part of a tax-evasion chain, even if the buyer itself had no actual knowledge of the fraud. Decision 13 turns that abstract rule into a checkable list: what the buyer must do, and how to document it, in order not to lose the credit.

Three thresholds, three verification tiers

The FTA groups supplies by individual amount and annual aggregate per supplier. The depth of mandatory procedures scales with those numbers.

Up to AED 10,000 per supply (ex-VAT) — simplified tier: detailed checks are not mandatory, as long as annual aggregate from that supplier stays below AED 100,000. This is the comfort threshold for small, one-off purchases.
Above AED 100,000 per year from the same supplier — the simplified exemption ends. All supplies from that counterparty (including fresh invoices under AED 10,000) require the full procedure: identity, address and risk indicators plus a per-supply check of commercial substance and market pricing.
Above AED 375,000 per year — enhanced checks on top: an unqualified bank confirmation letter from the supplier's UAE corporate bank account and a public / media reputation review for tax-evasion indicators.

What to verify on the supplier itself

The first verification layer is the counterparty. For every supplier over the threshold, the buyer must document:

identity against official registers: valid trade licence, constitutional documents, authorised representative confirmation;
actual place of business and its match with the licensed activity;
risk indicators — address or key-personnel changes more than twice in 12 months automatically trigger a fresh check;
for suppliers above AED 375,000 annually — a UAE bank confirmation letter for a corporate account plus a public-sources review.

The check is performed on first dealing and at least once every 12 months thereafter.

What to verify on each individual supply

The second layer is the specific transaction. Decision 13 requires documented evidence of:

a genuine commercial reason for the deal and its alignment with the supplier's licensed activity;
market-consistent pricing and margins;
sound title and transparent chain, where the supplier acts as an intermediary;
payment method: electronic payment is preferred, cash settlements require a documented justification.

Businesses that have already moved to e-invoicing automate part of these checks — the structured electronic invoice already carries supplier data in a machine-readable form.

Internal policy (Article 5 of Decision 13)

A separate requirement is a written internal verification policy. It must name the people who run the checks, review the findings, and supervise the process. Without such a policy the FTA will treat the procedure as not being in place — and that alone is enough to question the credits on the next audit.

Consequences of non-compliance

The main exposure is denial of input VAT on affected supplies. Where the FTA establishes that the buyer actually knew about a link to tax evasion, the denial becomes permanent for all such transactions. The Decision does not add a stand-alone fine for 'no verification' — the sanction works through the lost right of recovery, which, depending on purchase volume, can far exceed any administrative penalty. For a wider refresher on how input VAT fits the UAE VAT 5% regime, see our dedicated guide.

Where to start

Pull the top-20 suppliers by annual turnover from your returns and flag the AED 100,000 and AED 375,000 thresholds.
For each — refresh the trade licence, address confirmation and representative authority.
For suppliers above AED 375,000 — request a UAE bank confirmation letter and run a reputation review.
Draft the internal policy with real names and roles: who checks, who reviews, who signs off — not boilerplate.
Calendar annual re-verifications for each major supplier and set a trigger for 'more than two address/personnel changes in 12 months' → immediate re-check.

Per the FTA (tax.gov.ae), the procedure is already live: any input VAT claimed from 1 October 2026 is assessed with Decision 13 in view.

Topics:TaxVATRegulationBusiness