From 1 October 2026, VAT-registered businesses in the UAE will have new verification responsibilities before deducting input VAT on purchases. Federal Tax Authority Decision No. 13 of 2026 sets out the measures, procedures and conditions taxable persons must follow to verify both their suppliers and the supplies they receive.
This is more than an invoice-checking requirement. Businesses will need a documented process covering supplier identity, place of business, risk indicators, payment arrangements and the commercial substance of each taxable supply. They must also retain evidence showing that the required checks were performed.
This guide explains the new UAE VAT supplier verification requirements in simple terms and provides a practical implementation checklist.
What is FTA Decision No. 13 of 2026?
FTA Decision No. 13 of 2026 was issued on 22 July 2026 and takes effect on 1 October 2026. It applies for the purposes of Article 54(bis) of the UAE VAT Law and addresses the verification of the validity and integrity of supplies before input tax is deducted.
In practical terms, a business should no longer treat possession of a tax invoice as the only control needed before claiming input VAT. The recipient must carry out reasonable checks on the supplier and the transaction, document those checks and retain supporting records.
Key point: The decision applies to taxable persons receiving taxable supplies and seeking to deduct the related input VAT.
When do the new UAE VAT verification rules take effect?
The decision becomes effective on 1 October 2026. VAT-registered businesses should therefore design their policy, assign responsibility and start collecting supplier documents before that date.
Waiting until the first VAT return after implementation may create unnecessary pressure. Some required evidence, such as supplier identification, incorporation details, business-location checks or bank confirmation for larger suppliers, may take time to obtain. The verification should be incorporated into the business’s normal UAE VAT filing process.
What supplier checks are required?
1. Verify the supplier’s identity
The required evidence depends on whether the supplier is an individual or a legal entity.
If the supplier is a natural person, the business must:
- Obtain a copy of a valid Emirates ID or passport; and
- Meet the supplier, either in person or virtually, before the supply is made.
If the supplier is a legal person, the business must:
- Verify its incorporation using official databases, or obtain a valid certificate of incorporation;
- Check that the incorporation details are consistent with the entity’s name, address, employees and other relevant information; and
- Obtain valid identification, such as an Emirates ID or passport, for the director, agent or employee authorised to represent the supplier.
2. Verify the supplier’s address and place of business
The recipient must verify that the supplier has an actual place of business. This may be done using appropriate electronic methods or through a physical site visit.
The place of business should also be compatible with the supplier’s activities. For example, the business should investigate if the stated location, facilities or online presence appear inconsistent with the volume or nature of the transactions.
3. Assess supplier risk indicators
A business must consider whether any of the following indicators apply:
- The supplier changed its address more than twice during the previous 12 months;
- The supplier changed key employees, including managers or the people dealing with the customer, more than twice during the previous 12 months; or
- The supplier entered into transactions that appear disproportionate or unexpected in volume, value or nature compared with its size and trading history.
The presence of an indicator does not necessarily mean the supplier must be rejected. However, the business must retain a clear, justified explanation that is consistent with the information available and provide it to the FTA if requested.
4. Carry out enhanced checks for suppliers above AED 375,000
Additional checks apply 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.
In these cases, the recipient must:
- Obtain written confirmation from a UAE-authorised bank that the supplier has a bank account, without relevant reservations or conditions; and
- Review and assess publicly available reviews and media coverage from reliable sources to confirm consistency with the nature and size of the supplier’s business and identify possible tax-evasion concerns.
The bank confirmation does not need to be addressed specifically to the recipient of the supply.
What checks are required for each taxable supply?
Supplier due diligence is only one part of the new framework. The business must also assess each taxable supply received or accepted.
Commercial purpose of the transaction
The business must conduct a general assessment of the transaction and ensure the supplier’s participation is supported by genuine commercial reasons. An arrangement that has no clear business purpose or contains unnecessary parties should be reviewed carefully.
Payment method and payment destination
The payment method and terms must make commercial sense. A reasonable, documented explanation is required where:
- A third party is involved in making or receiving payment; or
- Payment is sent to a bank account outside the supplier’s country of incorporation.
Payment should be made electronically. If cash is used, there must be a documented commercial reason, the payment must remain within applicable tax-law thresholds, and the transaction must be readily verifiable.
Price and profit margin
The price or profit margin should not be commercially unjustifiable or significantly different from market conditions without a clear reason. Businesses should retain quotations, contracts, price comparisons or other evidence where a transaction is unusual.
Supplier activity and commercial licence
The goods or services supplied should fall within the supplier’s ordinary business activity and the activities it is licensed to perform. A mismatch between the supply and the supplier’s commercial licence is a warning sign requiring investigation.
Authenticity and ownership of goods
For goods, the recipient must verify their authenticity and origin. It must also consider whether the supplier owns the goods or has the legal right to dispose of them.
Intermediaries
If the supplier acts as an intermediary, there must be a clear and commercially justifiable reason for the intermediary’s role. The parties, payment flow, contractual responsibilities and value added by the intermediary should be documented.
How often must suppliers be verified?
A supplier must be verified:
- When the business deals with the supplier for the first time; and
- For repeat dealings, when the supplier has not been verified during the previous 12 months.
Each taxable supply must still be reviewed under the transaction-level requirements. This means annual supplier verification does not replace the need to examine individual purchases.
Are small purchases exempt?
A taxable person may disregard the measures and conditions for a taxable supply where the consideration, excluding VAT, is less than AED 10,000.
However, this exception is not available if the total supplies received from the same supplier:
- Exceed AED 100,000 during the previous 12 months; or
- Are expected to exceed AED 100,000 during the next 12 months.
Businesses should therefore track both the value of each transaction and the rolling 12-month spend by supplier. Splitting purchases into invoices below AED 10,000 should not be treated as a way to avoid the rules where total supplier spend crosses, or is expected to cross, AED 100,000.
What records and internal policy are required?
The taxable person must document the verification steps and retain supporting documents and records in a way that enables the FTA to check whether the procedures were implemented correctly.
The business must also maintain a documented policy that clearly identifies:
- The persons responsible for carrying out supplier and supply checks;
- The persons responsible for reviewing and supervising the process;
- The authority and responsibilities of each person; and
- The designated place where the policy and related records are retained.
For most small and medium-sized businesses, this should become part of the vendor onboarding, purchase approval and accounts-payable process—not a separate exercise performed only when the VAT return is prepared.
Practical implementation checklist for UAE businesses
- Create a supplier verification form. Capture legal name, licence details, address, authorised representative, identification and business activity.
- Classify suppliers by annual spend. Use rolling 12-month alerts for the AED 100,000 and AED 375,000 thresholds.
- Collect missing documents. Prioritise regular and high-value suppliers before 1 October 2026.
- Add transaction-level checks. Confirm commercial purpose, licence compatibility, payment destination, pricing and delivery evidence before approving input VAT.
- Define exception approvals. Require written explanations for third-party payments, overseas bank accounts, cash payments, unusual pricing and intermediaries.
- Assign responsibilities. Separate preparation, review and supervision where team size permits.
- Retain an audit trail. Store checklists, documents, screenshots, approvals and explanations with the supplier or transaction record.
- Update the procedure annually. Reverify suppliers at least once every 12 months when dealings continue.
- Train purchasing and accounts teams. The process starts before payment and cannot be handled effectively by the VAT preparer alone.
How the rules affect input VAT recovery
The decision directly links supplier and supply verification to the process followed before input tax deduction. A weak or undocumented process could expose an input VAT claim to challenge, particularly where the supplier, payment route or transaction contains warning signs.
Businesses should avoid two extremes: treating every purchase as suspicious, or continuing to claim input VAT based only on the invoice. A risk-based, consistently documented process is the more practical approach.
Frequently asked questions
Does the decision apply only to new suppliers?
No. New suppliers must be checked when first engaged. Existing suppliers must be reverified when they have not been verified during the previous 12 months.
Is a valid tax invoice still required?
Yes. The new verification requirements do not replace the existing UAE VAT conditions for input tax recovery. They add supplier and supply checks that must be completed and documented. Businesses making both taxable and exempt supplies should also review the separate rules on input tax apportionment in the UAE.
Are purchases below AED 10,000 always excluded?
No. The exception does not apply when total supplies from that supplier exceed AED 100,000 over the previous 12 months or are expected to exceed AED 100,000 over the next 12 months.
When is bank confirmation required?
Bank confirmation and the review of reliable public information are required when supplies from a supplier exceed, or are expected to exceed, AED 375,000 over the relevant 12-month period.
Can a business pay a supplier in cash?
The decision expects electronic payment. Cash may be used only where there is a documented commercial reason, the payment complies with applicable tax thresholds, and it can be easily verified.
Prepare before 1 October 2026
The most effective response is to integrate these requirements into vendor onboarding, procurement, payment approval and bookkeeping. Businesses should begin with their regular and high-value suppliers, as these relationships carry the greatest documentation burden. Strong accounting and bookkeeping processes will make the required audit trail easier to maintain.
STH Financial Services can help UAE businesses design a practical supplier-verification policy, update bookkeeping controls and review input VAT documentation before the new requirements take effect. Contact us to assess your current process and prepare a compliance checklist tailored to your business.
Source: Federal Tax Authority Decision No. 13 of 2026, unofficial English translation. This article is for general information and should not be treated as legal or tax advice for a specific transaction.
