Businesses claiming Input Tax in the UAE need to prepare for a major VAT compliance change. FTA Decision No. 13 of 2026 introduces new verification requirements that businesses must follow before deducting Input Tax. The decision takes effect on 1 October 2026.
Quick Answer: What Is Changing?
From 1 October 2026, having a valid tax invoice may no longer be enough on its own to support an Input Tax claim. VAT-registered businesses will need to verify the supplier and the underlying supply, keep evidence of the checks, and follow a documented internal verification policy. Failure to carry out the required checks may affect the business’s right to recover Input Tax where the supply is connected with tax evasion.
What Does FTA Decision No. 13 of 2026 Require?
The new rules are designed to help businesses demonstrate that they have taken reasonable steps to verify the validity and integrity of their purchases before claiming Input VAT.
Businesses will need to look at both who the supplier is and whether the transaction itself is genuine and commercially valid.
1. Verify Your Suppliers
For new suppliers, businesses will need to carry out identity and business verification. Depending on the supplier, this can include:
- Checking the supplier’s incorporation details.
- Verifying the authorised representative’s identity.
- Confirming the supplier’s actual place of business.
- Checking that the business location matches its activities.
- Reviewing potential supplier risk indicators.
The verification generally needs to be repeated when dealing with a supplier where the previous verification was more than 12 months old.
2. Check the Transaction
Businesses must also verify the supply itself before deducting Input Tax. This includes considering:
- Whether there is a genuine commercial reason for the transaction.
- Whether the supplier is actually involved in providing the goods or services.
- Whether the pricing is commercially reasonable.
- Whether the payment method and flow make sense.
- Whether the supplier’s licensed activities are consistent with the transaction.
Unusual payment arrangements, such as cash or payments to third-party accounts, may require additional explanation and supporting evidence.
3. Additional Checks for High-Value Suppliers
Extra requirements apply where supplies from a supplier exceed or are expected to exceed AED 375,000 over a 12-month period.
Businesses may need to obtain written confirmation from a UAE-authorised bank that the supplier maintains a bank account. Public information and the supplier’s business reputation also need to be considered.
What About Purchases Below AED 10,000?
The decision provides a limited exception for supplies below AED 10,000, excluding VAT.
However, this exception does not continue once total supplies from the same supplier exceed AED 100,000 over a 12-month period. At that point, the relevant verification requirements apply even to smaller individual purchases.
This means businesses should monitor total supplier spend, not just individual invoice values.
Written Policy and Record Keeping Are Important
Businesses should create a written supplier and supply verification policy. The verification evidence should be kept and made available to the FTA if requested. It should clearly identify:
- Who performs the checks
- Who reviews them
- Who supervises the process
- What evidence must be retained
- How supplier risk is assessed
What Should UAE Businesses Do Before 1 October 2026?
Businesses should start preparing now rather than waiting until the rules become effective. Practical steps include:
- Review your existing supplier onboarding process.
- Identify suppliers approaching the AED 100,000 and AED 375,000 thresholds.
- Update procurement and accounts payable procedures.
- Add supplier verification checks to your workflow.
- Review payment practices.
- Create a written verification policy.
- Set up a system to store verification evidence.
- Train finance and procurement teams.
This is particularly important for businesses with a large supplier base, frequent purchases, or significant Input VAT claims.
Official UAE Tax Resources
The Federal Tax Authority has published FTA Decision No. 13 of 2026 on its official legislation portal. Read FTA Decision No. 13 of 2026 – Official FTA Source
Businesses should also refer to the UAE’s official VAT legislation when reviewing their Input Tax recovery position. UAE Federal Tax Authority – VAT Legislation
conclusion
FTA Decision No. 13 of 2026 changes how UAE businesses should approach Input Tax verification. From 1 October 2026, businesses need to show that they have properly checked their suppliers and supplies before claiming Input VAT.
The best time to review your procurement and VAT processes is before the new rules take effect. Building a documented verification process now can help reduce compliance gaps and make your records easier to defend during an FTA review.
Frequently Asked Questions (FAQs)
1. When do the new UAE VAT supplier verification rules take effect?
FTA Decision No. 13 of 2026 takes effect on 1 October 2026. UAE VAT-registered businesses should review their supplier verification and Input Tax procedures before this date.
2. Is a valid tax invoice enough to claim Input VAT?
A valid tax invoice remains important, but businesses may also need to carry out the required checks on the supplier and the underlying transaction before recovering Input Tax.
3. What happens if purchases from one supplier exceed AED 375,000?
Where supplies from a supplier exceed or are expected to exceed AED 375,000 within a 12-month period, additional verification requirements may apply, including further checks relating to the supplier.
4. Are purchases below AED 10,000 exempt from verification?
A limited exception applies to certain supplies below AED 10,000 excluding VAT. However, this exception may no longer apply once total supplies from the same supplier exceed AED 100,000 over a 12-month period.
5. What should UAE businesses do before 1 October 2026?
Businesses should review supplier onboarding, monitor supplier spending, update procurement and accounts payable procedures, create a written verification policy, maintain supporting evidence, and train relevant staff before the new requirements take effect.
