New UAE Input VAT Supplier Verification Rules

What Businesses Must Do Before 1 October 2026

From 1 October 2026, UAE businesses claiming input VAT will need to look beyond the tax invoice. Federal Tax Authority Decision No. 13 of 2026 sets out measures, procedures and conditions for verifying the validity and integrity of suppliers and the taxable supplies received before input tax is deducted.

This is a major operational change for procurement, accounts payable and VAT teams. A valid tax invoice remains essential, but businesses must also be able to show that they checked who the supplier is, whether the supplier has a genuine business presence, whether the transaction makes commercial sense and whether adequate evidence was retained.

Effective date: FTA Decision No. 13 of 2026 takes effect on 1 October 2026 and applies to Taxable Persons for the purposes of Article 54(bis) of the UAE VAT Law.

Why has supplier verification become important?

Article 54(bis) addresses input tax where a supply, or a chain of supplies, is connected with tax evasion. The FTA may reject an input tax deduction when the taxable person knew, or should have known based on the circumstances, that the supply was connected to tax evasion. Decision No. 13 translates the verification requirement into specific, auditable steps.

The purpose is not to turn every buyer into an investigator. It is to require reasonable, documented checks that match the supplier relationship and transaction. Businesses that perform the required procedures will have stronger evidence that their input VAT process was responsible and properly controlled.

Supplier checks required by the new decision

Verify the supplier's identity

For a natural-person supplier, the taxable person must obtain valid identification, such as an Emirates ID or passport, and meet the supplier in person or virtually before the supply. For a legal-person supplier, the buyer must verify incorporation through an official database or obtain the incorporation certificate, confirm the details, and obtain valid identification for the director, agent or employee authorised to represent the supplier.

Confirm the actual place of business

The buyer must verify that the supplier has an actual place of business, using appropriate electronic methods or a field visit. The premises should also be compatible with the nature of the activities the supplier claims to conduct.

Assess supplier risk indicators

The decision highlights several indicators that require attention:

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

The supplier changed key employees or relevant managers more than twice during the previous 12 months.

The volume, value or nature of transactions is disproportionate or unexpected compared with the supplier's size and trading history.

If an indicator applies, the taxable person should retain a clear, justified explanation that does not conflict with the evidence available and can be provided to the FTA on request.

Apply additional checks at AED 375,000

Where supplies received from a supplier exceed AED 375,000 during the previous 12 months, or are expected to exceed that amount during the next 12 months, the buyer must obtain written confirmation from a UAE-authorised bank that the supplier has a bank account. The buyer must also review reliable, publicly available reviews and media coverage for information inconsistent with the supplier's business or indicating suspected tax evasion.

Checks required for each taxable supply

Supplier onboarding is only the first layer. Decision No. 13 also requires the taxable person to verify each taxable supply received or accepted. The review should cover the following areas:

Commercial purpose: the supplier's participation and the transaction should have genuine commercial reasons.

Payment terms: the method and conditions should be commercially justifiable. Third-party payments or payments to an account outside the supplier's country of incorporation require a reasonable explanation supported by the available facts.

Payment method: consideration should be paid electronically. Cash payments require a documented commercial reason, must stay within applicable legal thresholds and must be readily verifiable.

Pricing: prices or margins should not be commercially unjustifiable or significantly different from market conditions without a clear reason.

Licensed activity: the goods or services should not fall outside the supplier's ordinary or licensed activity without a credible explanation.

Goods and ownership: for goods, the buyer should verify authenticity, origin and the supplier's ownership or right to dispose of them.

Intermediaries: where a supplier acts as an intermediary, its role should have a clear and justifiable commercial explanation.

When must verification be performed?

A supplier must be verified when the business deals with it for the first time. For recurring dealings, the verification should be refreshed when the supplier has not been verified during the previous 12 months. Each taxable supply must also be reviewed in accordance with the supply-verification conditions.

The business must document the steps taken and retain supporting records. It must also maintain a written internal policy identifying who performs, reviews and supervises the procedures, together with their authority and responsibilities.

The AED 10,000 and AED 100,000 exception

A practical readiness plan before 1 October 2026

Create a central supplier master with legal name, licence or incorporation evidence, authorised representative details, VAT registration status and verified place of business.

Classify suppliers by annual spend so the AED 100,000 and AED 375,000 thresholds are monitored automatically where possible.

Update procurement onboarding forms and contracts to request the required information and permit periodic refreshes.

Add a documented supply-review step before input VAT is posted to the return, especially for unusual pricing, third-party payments, cash payments, intermediaries and goods with unclear origin.

Assign responsibility across procurement, accounts payable, tax and management, and approve a written verification policy.

Create a secure evidence folder or system record for every supplier and keep an audit trail of reviews, approvals and exceptions.

Test the process on high-spend and higher-risk suppliers before the effective date, then correct any information gaps.

How Young and Right can help

Young and Right can help VAT-registered businesses update supplier onboarding, design a verification checklist, create the required internal policy, review exception evidence and align accounts-payable controls with VAT return preparation. The objective is a practical process that protects input VAT recovery without creating unnecessary operational delay.