UAE VAT Supplier Verification Rules Take Effect on 1 October 2026

The UAE Federal Tax Authority (FTA) has set out detailed verification measures that taxable persons must follow for suppliers and supplies before deducting input VAT. FTA Decision No. 13 of 2026 implements the verification requirements referenced in Article 54(bis) of the VAT Law, which addresses input tax deductions where a supply or supply chain is connected to tax evasion.

The decision was issued on 22 July 2026 following approval of the relevant FTA memorandum at the Board's 45th meeting on 23 June 2026. The FTA lists its publication date as 20 August 2026, and the decision takes effect on 1 October 2026.

What the decision requires

The requirements operate at two levels: verification of the supplier and verification of each taxable supply received.

Supplier verification is required when dealing with a supplier for the first time and again where the supplier has not been verified during the previous 12 months. For a legal-person supplier, this includes checking incorporation details through official databases or supporting documents, verifying the identity of the person authorised to represent the supplier, and confirming that the supplier has an actual place of business compatible with its activities.

For a natural-person supplier, the decision requires valid identification and a meeting with the supplier, either in person or virtually, before the supply is made.

The decision also identifies specific supplier-risk indicators. These include a supplier changing its address more than twice during the previous 12 months, changing key employees — including managers or people with whom the taxable person deals — more than twice during that period, or carrying out transactions that are disproportionate or unexpected in volume, value or nature compared with the size and history of the business. Where an indicator applies, the taxable person must retain a clear and justified explanation and provide it to the FTA if requested.

Where supplies received from one supplier exceed AED 375,000 during the previous 12 months, or are expected to exceed that amount during the next 12 months, additional checks apply. These include obtaining written confirmation from a bank authorised in the UAE that the supplier holds a bank account, without relevant reservations or conditions, and assessing publicly available reviews and media coverage from reliable sources.

Supply verification applies to each taxable supply received or accepted. The taxable person must assess whether the transaction has genuine commercial reasons, whether the payment method and conditions are commercially justifiable, and whether prices or profit margins are commercially reasonable in light of market conditions.

The goods or services should also fall within the supplier's ordinary or licensed activities. For goods, the decision requires verification of authenticity, origin and the supplier's ownership or right to dispose of them. Where an intermediary is involved, there must be a clear and commercially justifiable explanation for its role.

Payment is another part of the verification process. The decision states that consideration should be paid electronically. Cash payments require a documented commercial reason, must remain within applicable tax-law thresholds and must be easily verifiable. Third-party payment arrangements or payments to accounts outside the supplier's country of incorporation also require a reasonable commercial explanation.

Thresholds and documentation

The decision provides an exception for taxable supplies where the consideration, excluding VAT, is below AED 10,000.

That exception does not apply where the total value of supplies received from the same supplier exceeds AED 100,000 during the previous 12 months, or is expected to exceed AED 100,000 during the following 12 months. Once that threshold is reached or expected to be reached, the below-AED-10,000 exception is no longer available.

Businesses must also document the verification steps they carry out and retain supporting records. A documented internal policy must identify the people responsible for implementing, reviewing and supervising the procedures, together with their responsibilities and authority.

In practice, the requirements are likely to involve coordination between procurement, accounts payable, finance and tax functions, particularly where businesses deal with large numbers of suppliers or recurring transactions.

Who this affects

The decision applies to taxable persons in relation to supplies they receive before deducting input tax. Its significance comes from Article 54(bis), which allows or requires the FTA, depending on the circumstances, to reject input tax deductions where a supply forms part of a supply or chain of supplies connected to tax evasion and the taxable person knew or should have known of that connection.

The verification rules therefore should not be read as meaning that every procedural omission automatically results in loss of input VAT. Instead, they establish the measures used under Article 54(bis) when determining whether a taxable person was required to be aware of a connection to tax evasion.

With the rules taking effect on 1 October 2026, businesses may need to review supplier-onboarding procedures, payment controls, verification records and internal responsibilities. The full decision should be checked through the FTA's official channels, and businesses assessing their own circumstances may need advice from a qualified tax professional.

Key Takeaways

• FTA Decision No. 13 of 2026 sets supplier and supply verification measures for taxable persons before input VAT deductions and takes effect on 1 October 2026.
• Supplier-risk indicators include address changes or changes of specified key employees occurring more than twice during the previous 12 months, as well as transactions that appear disproportionate or unexpected compared with the supplier's business.
• Supplies exceeding AED 375,000 from one supplier over the relevant 12-month period trigger additional checks, while the below-AED-10,000 exception stops applying once supplies from that supplier exceed, or are expected to exceed, AED 100,000 over the relevant 12-month period.

Sources: Federal Tax Authority, Khaleej Times, Bloomberg Tax.

Disclaimer: This content is for educational and informational purposes only. It is not legal, financial, investment, cybersecurity, medical, business, career, or other professional advice. Verify important information with official sources or qualified professionals before acting.