From 1 October 2026, UAE taxable persons will need to follow new supplier and supply verification procedures before deducting input VAT. The requirements arise from FTA Decision No. 13 of 2026, issued under Article 54 bis of the UAE VAT Law, which was introduced through Federal Decree-Law No. 16 of 2025.
For many businesses, this is more than a tax filing update. It affects supplier onboarding, procurement, accounts payable, payment controls, invoice review, and VAT documentation.
The key question is: How can we verify UAE suppliers correctly and protect our input VAT recovery before the new deadline?
We have prepared this practical guide to help businesses understand the new requirements, identify suppliers within scope, and implement a defensible verification policy.
Important: This article is for general educational purposes. Businesses should review the official Decision and obtain professional advice for their specific facts, transaction values, and industry risks.
How to Understand the New FTA Supplier Verification Rules
FTA Decision No. 13 of 2026 requires taxable persons to verify the validity and integrity of supplies received before deducting input VAT. The requirements apply in addition to the existing conditions for input tax recovery under UAE VAT legislation.
Article 54 bis addresses situations where a supply or supply chain is connected to tax evasion. The treatment depends on what the recipient knew or should have known:
- If the recipient actually knew that the supply or supply chain was connected to tax evasion, denial of the input VAT deduction is mandatory.
- If the recipient should have known, the FTA may deny the input VAT deduction based on the circumstances and available evidence.
- If the recipient did not perform the prescribed verification procedures, the business may be treated as having been aware, or required to know, of the connection.
This does not mean that every administrative mistake automatically removes input VAT recovery. However, failure to conduct and document the required checks can significantly weaken a business’s position during an FTA review.
The new framework has two separate components:
- Supplier verification: confirming who the supplier is, whether the supplier exists, and whether the supplier’s business profile is credible.
- Supply verification: confirming that each relevant transaction is genuine, commercially reasonable, properly paid, and consistent with the supplier’s licensed activities.
Businesses should begin updating their supplier onboarding and VAT filing Dubai processes now rather than waiting until October.
How to Verify a Supplier Before Your First Transaction
Supplier verification must be completed when dealing with a supplier for the first time. It must also be repeated if the business continues dealing with that supplier and 12 months have passed since the last verification.
Our recommended supplier file should contain the following information.
For a natural person
Where the supplier is an individual, obtain:
- A copy of valid identification, such as an Emirates ID or passport.
- Evidence of the individual’s business status where relevant.
- A record confirming that we met the supplier before the supply was made, either in person or virtually.
- Confirmation that the individual has the authority and capacity to provide the relevant goods or services.
For a legal entity
For a company, partnership, or other legal person, we should:
- Verify the supplier’s incorporation or registration through an official database where possible.
- Obtain incorporation documents, trade licence details, or equivalent registration evidence.
- Confirm that the legal name, licence details, registration number, and other information are consistent across the documents.
- Verify the identity of the director, agent, or employee authorised to represent the supplier.
- Obtain valid identification for the authorised representative.
- Confirm that the representative is authorised to negotiate, contract, invoice, and receive payment where applicable.
- Verify the supplier’s actual place of business electronically or through a field visit.
- Check whether the premises are consistent with the supplier’s claimed business activities.
A registered address alone may not be sufficient where the supplier’s operational profile suggests that a genuine place of business should exist. For example, a supplier claiming to operate a sizeable distribution business should be able to demonstrate an appropriate operating location, logistics capability, or credible fulfilment arrangements.
Supplier verification should be refreshed whenever there is a material change, and at least once every 12 months for continuing relationships.
Businesses that are still organising their legal and operational structures can also review our guidance on company formation UAE to understand how licensing, business activities, and supporting documentation affect future compliance.
How to Verify Individual Supplies Before Claiming Input VAT
Supplier verification is only the first step. Before deducting input VAT, we must also assess the individual supply.
The purpose is to establish that the transaction is genuine, commercially explainable, and consistent with the supplier’s business profile.
For each relevant supply, we should document the following.
Genuine commercial reason
Record why the business required the goods or services and why the selected supplier was involved. The explanation should be specific rather than generic.
For example, a suitable record might explain that a supplier was selected because it held the required technical licence, maintained stock in the UAE, met an agreed delivery schedule, or provided specialist services at a commercially supportable price.
Payment flow and method
Electronic payments should normally be used because they create a clearer audit trail. We should record:
- The account from which payment was made.
- The account receiving payment.
- The payment date and reference.
- Whether the account belongs to the supplier.
- Whether any third party was involved in the payment route.
Cash payments require a documented commercial reason. Third-party payments and payments to accounts outside the supplier’s country of incorporation should also be supported by a clear explanation and evidence.
Pricing and margins
We should assess whether the consideration is reasonable compared with prevailing market rates. This does not necessarily require a formal valuation for every transaction. Depending on the circumstances, evidence may include:
- Comparable supplier quotations.
- Market price references.
- Historical purchase prices.
- Approved pricing schedules.
- Cost-plus calculations.
- Commercial explanations for unusual margins or discounts.
A price significantly above or below market expectations should be explained before input VAT is claimed.
Licensed business activity
Confirm that the goods or services fall within the supplier’s licensed and ordinary business activities. A supplier may be properly incorporated but still lack the appropriate authority to provide a particular service.
The invoice, purchase order, contract, trade licence, and actual supply should tell a consistent story.
Ownership and origin of goods
For goods, retain appropriate evidence of ownership, origin, movement, delivery, and receipt. Depending on the transaction, this may include delivery notes, warehouse records, shipping documents, customs records, or inventory entries.
Intermediary involvement
Where an intermediary is involved, document its role and commercial purpose. We should be able to explain why the intermediary was necessary, what service it performed, and how its remuneration was determined.
An unexplained intermediary, circular transaction, or payment route that does not match the contractual arrangement should be treated as a risk requiring further review.
How to Apply the AED 10,000 and AED 100,000 Thresholds Correctly
FTA Decision No. 13 of 2026 includes a small-value exception. Verification procedures may generally be disregarded for an individual supply valued at less than AED 10,000, excluding VAT, subject to the conditions in the Decision.
However, the exception is not a general exemption for low-value transactions with every supplier.
It is disapplied where the total value of supplies received from one supplier:
- Exceeded AED 100,000 during the previous 12 months; or
- Is expected to exceed AED 100,000 during the following 12 months.
The calculation is applied on a rolling 12-month basis per supplier. It is not simply a calendar-year test.
This means a supplier providing recurring services at approximately AED 8,300 per month could exceed AED 100,000 over 12 months. Once the applicable supplier threshold is exceeded, individual supplies below AED 10,000 may no longer benefit from the small-value exception.
We recommend maintaining a supplier spend dashboard that tracks:
- Total purchases per supplier over the previous 12 months.
- Expected purchases over the next 12 months.
- Individual supply values excluding VAT.
- Whether the AED 10,000 exception is still available.
- Whether additional high-value supplier checks are required.
A simple spreadsheet may be sufficient for a small business, while larger organisations may need an accounting or procurement system integration.
How to Handle High-Value Suppliers Above AED 375,000
Additional checks apply where supplies from one supplier exceed, or are expected to exceed, AED 375,000 over a 12-month period.
For these suppliers, the business should obtain:
- An unqualified written confirmation from a UAE-authorised bank confirming that the supplier holds a bank account; and
- A documented review of publicly available information, including public reviews and relevant media coverage.
The bank confirmation should be retained without unexplained qualifications or limitations. Businesses should also ensure that the bank account information is consistent with the payment arrangements used in practice.
The public reputation review should be proportionate but meaningful. It could include checking:
- The supplier’s official website and business presence.
- Public customer reviews.
- Industry directories.
- Relevant media coverage.
- Regulatory or enforcement information that is publicly available.
- Material inconsistencies between the supplier’s claimed activities and its public profile.
A negative review is not automatically proof of tax evasion. The purpose is to identify risk indicators and determine whether additional questions, evidence, or controls are necessary.
How to Write the Mandatory Supplier Verification Policy
Article 5 requires each taxable person to maintain a documented policy for implementing, reviewing, and supervising the procedures.
The policy should clearly identify:
- Who performs supplier verification.
- Who performs transaction-level supply verification.
- Who reviews exceptions and high-risk findings.
- Who supervises the overall process.
- The authority and responsibilities of each person.
- The records that must be retained.
- The escalation process for unusual or incomplete transactions.
- How the 12-month re-verification date is monitored.
- How supplier thresholds are calculated and approved.
- Who can approve input VAT where a risk indicator is present.
The policy should connect procurement, finance, tax, compliance, and management responsibilities. It should also explain how we handle exceptions, including cash payments, third-party payments, foreign bank accounts, unusual pricing, intermediaries, and supplies outside a supplier’s normal activities.
A practical policy should be usable by staff. It should include checklists, approval fields, document naming rules, retention requirements, and escalation timelines. A policy that exists only on paper but is not followed will provide limited protection.
Businesses can also review their wider corporate tax UAE obligations to ensure that VAT supplier controls align with their accounting records, tax governance, and financial reporting processes.
How to Protect Your Input VAT Recovery by October 1
With the deadline approaching, we recommend the following implementation plan.
1. Identify suppliers within scope
Export the previous 12 months of purchase data and rank suppliers by total value. Include recurring service providers, consultants, contractors, landlords, logistics providers, and related-party suppliers.
2. Complete a supplier gap assessment
Check whether each key supplier file contains current incorporation or licence documents, representative identification, authority evidence, place-of-business confirmation, and risk assessment records.
3. Create a transaction verification checklist
Build a process for recording the commercial reason, pricing support, licence alignment, payment method, goods origin, delivery evidence, and intermediary role before input VAT is claimed.
4. Configure threshold monitoring
Track the AED 10,000 per-supply exception, the AED 100,000 rolling supplier threshold, and the AED 375,000 high-value supplier tier.
5. Train responsible employees
Procurement and accounts payable teams should understand that an invoice alone may not demonstrate compliance. Staff must know when to stop processing a transaction and escalate it for review.
6. Retain evidence systematically
Use secure digital supplier folders with clear naming conventions and version control. Records should be retrievable if the FTA requests evidence during an audit or review.
Businesses with broader financial requirements may also benefit from professional guidance on business account opening and business loans UAE, because reliable banking records and transparent payment flows support wider financial and tax governance.
How to Get Expert VAT Support
FTA Decision No. 13 of 2026 makes supplier due diligence an important part of input VAT governance. The most effective approach is not to treat verification as a last-minute formality, but to integrate it into supplier onboarding, procurement approval, payment processing, and business consultancy Dubai support.
At my eloah business hub, we help businesses develop tailored, practical compliance processes that reflect their supplier base, transaction values, operational structure, and risk profile. Our approach focuses on clear documentation, proactive review, transparent advice, and cost-effective implementation.
We can support your business with:
- Supplier verification checklists.
- VAT control and documentation reviews.
- Rolling threshold analysis.
- High-value supplier due diligence.
- Internal policy preparation.
- Accounts payable and procurement workflow reviews.
- Ongoing VAT filing Dubai support.
The October 1 deadline is close. Reviewing your supplier records now can help reduce disruption, strengthen your audit position, and protect legitimate input VAT recovery.
Sources: Federal Tax Authority : FTA Decision No. 13 of 2026, PwC Middle East : Verification of Supplies Before Input Tax Deduction, and EY : UAE Due Diligence Requirements for Input VAT Recovery.
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