For years, a valid tax invoice was the main thing standing between a UAE business and its input VAT recovery. That has changed. Federal Tax Authority (FTA) Decision No. 13 of 2026 was issued on 22 July 2026 and took effect on 1 October 2026. It requires every VAT-registered business to verify that its suppliers and their supplies are genuine before it deducts input tax. This is a new compliance obligation, and it sits under Article 54(bis) of the VAT Law.

The aim is to tackle VAT fraud, particularly “missing trader” chains and fake invoicing. In practice, it moves part of the due-diligence burden onto the business claiming the deduction.

This document is based on an unofficial English translation of the Decision. Please check the official Arabic text in the Official Gazette, and take professional advice for your own facts.

Any “Taxable Person”, meaning any business registered or obliged to register for VAT in the UAE. If you claim input tax on purchases of goods or services, this applies to you. That covers almost every VAT-registered business, from SMEs to large groups.

The Decision sets out two layers of checks: one on the supplier (Article 3) and one on each supply (Article 4).

1. Verifying the supplier (Article 3)

Identity

•  Individual supplier: obtain a copy of a valid Emirates ID or passport, and meet the supplier (in person or virtually) before the supply is made.

•  Company supplier: verify incorporation through official databases, or obtain the certificate of incorporation. The details must be valid and consistent with the entity’s name, address and employees. You must also verify the identity of the director, agent or employee authorised to represent the supplier, using an Emirates ID or passport.

Place of business

•  Confirm the supplier has an actual place of business, either electronically or by a field visit.

•  Confirm that the premises are compatible with the activities the supplier claims to carry out.

Risk indicators

You must check that none of these red flags applies:

•  The supplier changed its address more than twice in the previous 12 months.

•  The supplier changed its key people (managers or your contacts) more than twice in the previous 12 months.

•  The supplier’s transactions are disproportionate or unexpected in volume, value or nature, given its size and track record.

If a red flag does apply, you are not automatically barred from claiming. You must keep a clear, justified explanation and give it to the FTA on request. That explanation must not contradict the evidence or information you hold.

Enhanced checks for larger suppliers

If you buy more than AED 375,000 from a supplier over the previous 12 months, or expect to over the next 12 months, you must also:

•  Obtain written confirmation from an authorised UAE bank that the supplier has a bank account. It must carry no relevant reservations or conditions, and it does not have to be addressed to you.

•  Review publicly available reviews and media coverage from reliable sources. These should be consistent with the supplier’s business and show no signs of suspected tax evasion.

2. Verifying each supply (Article 4)

For every taxable supply you receive, you need to assess the following.

•  Commercial substance: the transaction’s conditions make sense, and the supplier’s involvement rests on genuine commercial reasons.

•  Payment: payment terms and methods must be commercially justifiable. If a third party is involved in paying or receiving the money, or payment goes to a bank account outside the supplier’s country of incorporation, you need a reasonable commercial explanation. Payment should be electronic. Cash is allowed only with a documented commercial reason, within the thresholds in the applicable tax legislation, and where it is easily verifiable.

•  Pricing and margins: prices and profit margins should not be unjustifiably different from market conditions.

•  Licence alignment: the goods or services must fall within the supplier’s ordinary activity and its commercial licence.

•  Goods authenticity: verify the origin and authenticity of goods, and that the supplier owns them or has the right to dispose of them.

•  Intermediaries: if the supplier is a middleman, there must be a clear, justifiable reason for its role in the chain.

Threshold	What it triggers
Below AED 10,000 (excl. VAT) per supply	Verification measures may be disregarded (Art. 6(1))
Above AED 100,000 total from a supplier (past 12 months, or expected in the next 12)	The AED 10,000 exemption is lost, so even small invoices from that supplier must be verified (Art. 6(2))
Above AED 375,000 total from a supplier (past 12 months, or expected in the next 12)	Bank account confirmation and reputation/media review required (Art. 3(4))
More than 2 address changes or key-people changes in 12 months	Risk indicator: needs a documented, justified explanation (Art. 3(3))
12 months	Supplier verification must be refreshed if the supplier hasn't been verified in the previous 12 months (Art. 5(1))

 

Two practical points follow from these thresholds:

1.  The AED 10,000 carve-out is per supply, but the AED 100,000 test is cumulative per supplier. A business with many small, repeated purchases from one vendor can easily lose the exemption. Track cumulative spend by supplier, not by invoice.

2.  The thresholds are forward-looking. “Expected to exceed” means contracts, budgets and forecasts matter. If you sign a framework agreement that will clearly pass AED 375,000 within a year, the enhanced checks apply from the start.

Since the Decision is already effective, treat these as immediate priorities.

3.  Adopt a written verification policy. Article 5 requires a documented policy naming the people responsible for implementing, reviewing and supervising the checks, with their powers and responsibilities set out clearly. It must be kept at the designated location where you hold your records.

4.  Build supplier onboarding around Article 3. Create a standard onboarding checklist covering identity documents, incorporation verification, authorised-signatory ID, place-of-business confirmation, and the three risk indicators. Do this before the first transaction.

5.  Segment your supplier base. Run your accounts payable data for the past 12 months and classify suppliers into: below AED 10,000 per supply and below AED 100,000 cumulative (light-touch); above AED 100,000 cumulative (full verification, no small-invoice exemption); above AED 375,000 cumulative (full verification plus bank confirmation and reputation review).

6.  Remediate existing suppliers. The Decision applies to dealings with existing suppliers as well. Prioritise high-spend vendors, and any supplier that has not been verified in the last 12 months.

7.  Embed supply-level checks in procurement and AP. Add control points to purchase-order approval and invoice processing: Does the supplier’s licence cover this activity? Is payment going to the supplier’s own account, in its home country? Is a third party or intermediary involved? Is the price in line with the market? For goods, is there evidence of origin and ownership?

8.  Tighten payment controls. Default to electronic payment. Flag cash payments and payments to third-party or foreign bank accounts for documented justification before release.

9.  Set up a 12-month re-verification cycle. Build review dates into your vendor master data so the system prompts re-verification and nothing lapses.

10.  Document everything. You must retain verification steps and supporting records so the FTA can confirm you carried them out. Keep a clear audit trail for each supplier and each supply.

11.  Train your teams. Procurement, finance, AP and tax teams all need to understand the new requirements. Many of the red flags will be spotted by people outside the tax function.

•  Input VAT recovery is now conditional on diligence. The Decision is made under Article 54(bis) of the VAT Law and is framed around verification “before deduction of Input Tax.” Confirm with your advisers how the FTA will treat deductions where verification is missing or incomplete.

•  Cost and effort for SMEs. Smaller businesses with limited back-office capacity will feel this most. A proportionate, risk-based process, using the AED 10,000 exemption wisely, is essential.

•  Supplier friction. Suppliers may be asked for ID copies, bank letters and incorporation documents. Update your supplier contracts and onboarding communications to set expectations early.

•  Data protection. You will be collecting Emirates ID and passport copies. Make sure storage and access controls are appropriate.

•  Judgment calls are built in. Phrases such as “commercially justifiable,” “significantly different from market conditions” and “reliable sources” are not defined numerically. Document your reasoning, and be consistent.

•  Cross-border and intermediary-heavy sectors. Trading, commodities, electronics, precious metals and logistics, where intermediaries and offshore payments are common, will see more scrutiny on payment routing and goods origin.

•  Group structures. If your group centralises procurement or shares suppliers across entities, decide who performs and owns the verification for each VAT-registered entity.

•  Cash limits. The Decision refers to cash thresholds “specified in the applicable Tax legislation” without stating a figure. Confirm the current limit before allowing any cash settlement.