New UAE Verification Requirements for Input VAT Claims Are Now in Effect

For many UAE businesses, checking a supplier before approving an invoice has traditionally focused on familiar questions.

Is the trade license valid? Is the tax invoice correct? Is the supplier registered for VAT?

From 1 October 2026, businesses claiming input VAT need to look more closely at the suppliers they deal with and the transactions behind their invoices.

Under Federal Tax Authority Decision No. 13 of 2026, taxable persons are required to carry out specified checks to verify the validity and integrity of suppliers and taxable supplies before deducting input tax.

The change introduces a more structured approach to supplier due diligence and makes documentation increasingly important.

For business owners, family enterprises and investment structures operating in the UAE, this means supplier onboarding, procurement and finance processes may need to work more closely together.

A Tax Invoice Is Only Part of the Picture

A properly issued tax invoice remains important.

But the new framework goes further.

Businesses may need to demonstrate that they have taken reasonable steps to understand who they are buying from, what they are buying and whether the transaction makes commercial sense.

The Decision was issued for the purposes of Article 54(bis) of the UAE VAT Law, which addresses input tax recovery where supplies form part of a supply or supply chain connected with tax evasion.

The practical message is clear: supplier verification should not be treated simply as an administrative exercise.

It should form part of the business’s VAT controls.

Consider This Example

A business receives a taxable supply worth AED 9,000, excluding VAT.

Because the individual supply is below AED 10,000, it may initially appear to fall within the small-value exception.

However, imagine the business expects to purchase AED 9,000 from the same supplier every month.

Over 12 months, expected purchases would total:

AED 9,000 × 12 = AED 108,000

That changes the position.

The exception for supplies below AED 10,000 does not apply where the total value of supplies received from that supplier exceeded AED 100,000 during the previous 12 months, or is expected to exceed AED 100,000 during the next 12 months.

This means businesses need to look beyond the value of an individual invoice and consider the wider supplier relationship.

What Should Businesses Be Checking?

1. Know Who You Are Buying From

Supplier verification begins with identity.

For a company or other legal person, this includes verifying its incorporation through official databases or obtaining its incorporation documents and checking that the information is consistent with the business.

The identity of the director, agent or employee authorized to represent the supplier must also be verified.

Businesses should additionally confirm that the supplier has an actual place of business and that the premises are consistent with the activities it claims to carry out.

The Decision also identifies potential warning signs.

These include a supplier changing its address or key employees more than twice within the previous 12 months, or entering into transactions that appear disproportionate or unusual compared with the size and history of its business.

A warning sign does not automatically mean that the supplier is illegitimate. However, where one arises, the business should retain a clear and reasonable explanation.

2. Understand the Transaction

The verification does not stop with the supplier.

Businesses must also consider the taxable supply itself.

Does the transaction have a genuine commercial purpose?

Are the goods or services consistent with the supplier’s ordinary business or licensed activities?

Is the pricing commercially reasonable?

Are the payment arrangements logical?

These questions become particularly important where the structure of a transaction is unusual.

For example, if payment is being made to a third party or to a bank account outside the supplier’s country of incorporation, there should be a reasonable commercial explanation.

The Decision also provides that consideration should generally be paid electronically. Where cash is used, there should be a documented commercial reason, the payment must remain within applicable legal thresholds and it should be readily verifiable.

For goods, businesses may also need to consider their authenticity and origin, together with whether the supplier owns the goods or has the right to dispose of them.

3. Pay Attention to Higher-Value Suppliers

Additional measures apply when the value of supplies received from one supplier exceeds AED 375,000 during the previous 12 months, or is expected to exceed this amount during the next 12 months.

At this level, the taxable person must obtain written confirmation from an authorized bank in the UAE confirming that the supplier has a bank account, subject to the requirements of the Decision.

The business must also review publicly available information, including relevant reviews and media coverage from reliable sources, and assess whether that information is consistent with the nature and scale of the supplier’s business.

This effectively creates another level of due diligence for significant supplier relationships.

Three Numbers Businesses Should Remember

The distinction matters.

A business processing many relatively small invoices from the same supplier cannot necessarily assess those invoices individually. It needs visibility over its total relationship with that supplier.

Verification Is Not a One-Time Exercise

The Decision also introduces a clear timetable for supplier checks.

A supplier should be verified when the business deals with them for the first time.

For an existing supplier, verification is required where the supplier has not been verified during the previous 12 months.

Each taxable supply received or accepted must also be considered against the supply-verification requirements.

For businesses with large supplier networks, this could make supplier records and purchasing systems increasingly important.

Keep the Evidence

Performing the checks is only part of the requirement.

Businesses must also be able to demonstrate what they have done.

The Decision requires taxable persons to document their verification steps and retain supporting documents and records so that the FTA can assess whether the procedures were correctly implemented.

Businesses must also maintain a documented internal policy identifying who is responsible for:

• carrying out the verification;
• reviewing it;
• supervising the process; and
• exercising the relevant responsibilities and authority.

In practice, this means supplier due diligence increasingly sits across procurement, finance, tax and compliance, rather than belonging to one department alone.

What Should Businesses Do Now?

As the Decision has been effective since 1 October 2026, businesses should review whether their existing supplier controls reflect the new requirements.

This should include reviewing the supplier database, identifying suppliers approaching the AED 100,000 and AED 375,000 thresholds, checking when existing suppliers were last verified, and ensuring that supporting documents can be retrieved when required.

Businesses should also consider whether their procurement and accounts-payable systems can monitor cumulative spend by supplier over the relevant 12-month periods.

For established family businesses and internationally active entrepreneurs, this is particularly relevant where purchasing, investments and operating companies involve multiple entities, jurisdictions and service providers.

A supplier may have worked with the business for years.

That familiarity should not replace documented verification.

From Invoice Checking to Supplier Governance

FTA Decision No. 13 of 2026 reflects a broader shift in the way businesses should think about input VAT controls.

The question is no longer only:

Do we have the correct invoice?

Businesses should increasingly be able to answer:

Who is our supplier? Does the transaction make commercial sense? Have we completed the required checks? And can we prove it?

For well-governed businesses, the objective is not to create unnecessary administration.

It is to build supplier verification into existing processes so that compliance becomes part of normal business practice rather than something reconstructed when questions arise.

Effective date: 1 October 2026

Source: Federal Tax Authority Decision No. 13 of 2026, Measures, Procedures and Conditions required by Taxable Persons for the Verification of the Validity and Integrity of the Supplies before Deduction of Input Tax. The FTA’s published English version is identified as an unofficial translation.