UAE VAT Update
FTA Decision No. 13 of 2026: Supplier Verification Before Input VAT Recovery in the UAE
A valid tax invoice is still the starting point for recovering input VAT in the UAE, but from 1 October 2026 it is no longer enough on its own. FTA Decision No. 13 of 2026 requires you to verify your supplier and each supply before you deduct, and to keep the evidence.
This guide follows the session Mr Chirag presented on the decision. It covers the checks, the AED 10,000, AED 100,000 and AED 375,000 thresholds, the red flags we see in practice and what your finance team should set up before the next VAT return.
Why Input VAT Now Depends on What You Knew
The decision supports Article 54(bis) of the UAE VAT Law, which links your right to deduct input VAT to what you knew, or should have known, about the supply.
You knew
If a supply, or the chain it belongs to, is connected to tax evasion and you knew of the link, the FTA must reject the input tax deduction.
You should have known
If the circumstances should have alerted you, the FTA may reject the deduction. Failing to carry out the FTA’s prescribed checks counts as “should have known”.
The verification steps sit on top of the existing conditions for recovering input VAT. They do not replace them. What changes is that you must now be able to evidence your checks before you claim.
What FTA Decision No. 13 of 2026 Covers
| Article | Subject | What it covers |
|---|---|---|
| Article 3 | Verify the supplier | Identity, place of business, risk indicators and extra checks above AED 375,000 |
| Article 4 | Verify the supply | Commercial rationale, payment terms, pricing, licence scope, origin and ownership of goods, and intermediaries |
| Article 5 | Procedures | When to verify, how to document it and a written policy naming who is responsible |
| Article 6 | Exceptions | Supplies below AED 10,000 (excluding VAT), unless the supplier exceeds AED 100,000 in 12 months |
Verifying Your Supplier (Article 3)
Identity
For an individual, obtain a copy of valid ID, such as an Emirates ID or passport, and meet the supplier before the supply, in person or virtually. A Zoom or Teams call counts as meeting them, but it does not replace the ID. Record the date and the method.
For a company, verify its incorporation through official databases or obtain the certificate of incorporation. Check that the name, address, employees and other details are valid and match, and take valid ID for the director, agent or employee authorised to represent the supplier.
Beyond that, we recommend building a fuller supplier file. This is good practice rather than a list the decision spells out document by document:
- Trade licence copy
- Memorandum of association
- VAT registration certificate and corporate tax certificate
- Valid ID of the directors or authorised representative
- A match between the address on the trade licence and the address on the tax invoice
Place of business
Confirm that the supplier has an actual place of business, using appropriate electronic means or a visit to the premises, and that the location suits what the supplier does. An address printed on an invoice proves nothing by itself. Whoever in your team owns the supplier should visit or verify it online.
Take a photo during a site visit and ask for a tenancy contract or Ejari, so you can show the address is registered in the supplier’s name. If a supplier says it has no physical office and stores goods elsewhere, ask where. A third-party warehouse can be a perfectly good answer, as long as you verify it and keep the evidence.
Risk indicators
Three indicators need to be ruled out, or explained:
Address changes
More than two changes of address in the previous 12 months.
Key people changes
More than two changes of key employees, such as managers or your contacts, in 12 months.
Out-of-scale trading
Transactions that are disproportionate or unexpected for the supplier’s size and history, such as a small-volume supplier suddenly raising a very large invoice.
An indicator is not a verdict. If one applies, find out why, for example why two key employees left in a year. Keep a clear, justified explanation on file and be ready to give it to the FTA on request. It has to be consistent with the evidence you hold.
Extra checks above AED 375,000
Where supplies from one supplier exceed AED 375,000 in the preceding 12 months, or are expected to in the following 12 months, two more checks apply:
- Bank account confirmation. A written confirmation from an authorised bank in the UAE that the supplier holds an account, with no relevant reservations or conditions. It does not have to be addressed to you.
- Reputation review. Public reviews and media coverage from reliable sources should fit the supplier’s business and show no indicators of suspected tax evasion.
Verifying Each Supply (Article 4)
Knowing the supplier is half the job. Each transaction also has to stand up on its merits. Assess the conditions of the deal and make sure the supplier’s role rests on genuine commercial reasons.
The goods and the supplier’s licence
Where the supply involves goods, check that their origin and authenticity can be verified and that the supplier owns them or has the right to dispose of them. Then compare what is being sold with the trade licence. If the licence says stationery and the invoice is for furniture, the supply is outside the licence and you need to know why.
Pricing matters too. A margin that is very low or very high against the market is an alarm bell, and a clear reason, such as quotes or benchmarks, should be on file. If another intermediary sits in the supply chain, ask what its role is and whether it holds the licences to do that work.
Payment
The decision requires payment by electronic means. Cash is only an exception, and it needs a documented commercial reason, has to be within the legal thresholds and has to be easily verifiable. We have seen suppliers ask to be paid into a friend’s account in the BVI instead of their own. If you are dealing with XYZ company, the bank details should be XYZ company’s. Anything else needs a reasonable explanation before you pay.
This table sets out what to hold on file when a trigger appears:
| Trigger | What you need on file |
|---|---|
| A third party pays or receives payment | A reasonable commercial explanation consistent with your evidence |
| Account outside the supplier’s country of incorporation | A documented, reasonable explanation |
| Payment in cash | A documented reason, within legal thresholds and easily verifiable |
| Price or margin far from the market | A clear reason, for example quotes or benchmarks |
| Goods or services outside the licence | Trade licence activities that cover the supply |
| The supplier acts as an intermediary | A clear, justifiable explanation of its role |
Procedures and Documentation (Article 5)
- Verify the supplier at first dealing, and again if the supplier has not been verified in the previous 12 months.
- Verify each supply by applying the Article 4 checks to every taxable supply you receive.
- Document and retain the steps you took and the evidence, in a form the FTA can test.
- Maintain a written policy that identifies the people responsible for implementing, reviewing and supervising the checks, sets out their powers and responsibilities and is kept at your designated document retention location.
Write down what you checked, what was present, what was missing and how you dealt with the risk. A policy that is written, signed and approved matters because people move on. If the person who held all the information has left when the FTA audits you two or three years from now, you still need to open the file and show that you verified.
The AED 10,000, AED 100,000 and AED 375,000 Thresholds
Three numbers decide how much checking you do.
AED 10,000
Per supply, excluding VAT. Below this, a supply may be exempt from the checks.
AED 100,000
Per supplier, over the previous or next 12 months. Above this, the AED 10,000 exception falls away.
AED 375,000
Per supplier, over the previous or next 12 months. Above this, add bank confirmation and a reputation review.
The three examples below are illustrative, and all amounts exclude VAT.
| Supplier | Purchases | Position |
|---|---|---|
| Office supplies vendor | Invoices of AED 1,500 to 4,000; about AED 40,000 a year | Exception applies. Each supply is under AED 10,000 and the annual total is under AED 100,000. |
| IT support contractor | Monthly invoices of AED 9,000; AED 108,000 expected this year | Full checks. The exception is lost above AED 100,000, but no bank letter is needed because the total is under AED 375,000. |
| Steel trader | A single order of AED 450,000 | Full checks plus bank confirmation and reputation review. |
The IT contractor is the one to remember. Every invoice is under AED 10,000, yet the supplier needs full checks because the year’s total passes AED 100,000. Track spend per supplier over rolling 12-month periods, looking forward as well as back, instead of reading invoices one at a time.
Three Points to Settle Before Your Next VAT Return
- Existing suppliers. Suppliers not verified in the last 12 months need verifying on your next dealing with them. Licences expire and are renewed, so keep the renewed copy on file.
- Timing. The checks must be complete before the input tax is deducted, not at audit. Starting to verify after the FTA has asked for your records is too late.
- Split invoices. The AED 100,000 test looks through the splitting of supplies below AED 10,000. Make sure your suppliers know you track their totals.
Getting Your Business Ready
You do not need a large project. This is the order we suggest:
- Sort your suppliers by annual spend against the AED 10,000, AED 100,000 and AED 375,000 thresholds.
- For each group, decide which checks apply and list what you already hold.
- Map the gaps, meaning what you have, what you do not and what you need to ask suppliers for.
- Draft the policy and name the owner of the process.
- Turn the checks into a numbered checklist. A person processing a supplier on a call can forget one check, and a list prevents that. If the checklist is not complete, do not claim the input VAT.
- Train the procurement and finance teams.
- Refresh each supplier at least every 12 months.
Frequently Asked Questions
Can a supplier with a virtual office still pass verification?
The decision asks you to confirm an actual place of business that suits the supplier’s activity. A virtual office on its own is a point to resolve, not an automatic fail. If the supplier explains that its goods sit in a third-party warehouse, verify that arrangement and put the evidence on file before you claim.
Can we still pay a supplier in cash?
Payment is required by electronic means. Cash is only acceptable where there is a documented commercial reason, it is within the legal thresholds and it can be easily verified. In practice we advise avoiding cash except for small amounts.
Does a single invoice under AED 10,000 always avoid the checks?
No. The exception falls away once the supplier’s total exceeds AED 100,000 over the previous 12 months or the next 12 months, and splitting supplies to stay under AED 10,000 does not get around that test.
Who in the business should own these checks?
The policy must name the people responsible for implementing, reviewing and supervising the verification, with their powers and responsibilities. In most companies that means finance and procurement working to one shared checklist.
How often do suppliers need to be re-verified?
A supplier that has not been verified in the previous 12 months needs to be verified at your next dealing. Trade licences expire and are renewed every year, so refreshing the file at least annually keeps it current.
How Credora Consultancy Can Help
We are an FTA approved tax agent, and Mr Chirag and the team support businesses with:
- Verification policy drafting under Article 5
- Supplier risk reviews and onboarding packs
- Input VAT health checks and FTA audit readiness
- Training for procurement, finance and accounts payable teams
If you would like a one-to-one session, contact us and we will be happy to help.
CREDORA TAX INSIGHTS
Watch the Full Presentation: FTA Decision No. 13 of 2026
Watch Mr. Chirag from Credora Consultancy LLC explain the new UAE input VAT verification requirements, supplier due diligence, the AED 10,000, AED 100,000 and AED 375,000 thresholds, and the practical steps businesses should take before claiming input VAT.
