UAE Introduces Supplier Verification Rules for Input VAT Recovery

The Federal Tax Authority (FTA) has issued FTA Decision No. 13 of 2026, which sets out the checks VAT-registered businesses in the UAE must carry out on their suppliers and supplies before deducting input tax. The Decision is issued under Article 54 (bis) of Federal Decree-Law No. 8 of 2017 on Value Added Tax and took effect on 1 October 2026.

Checking Suppliers Before Recovery

Businesses must verify a supplier when they first deal with it, and again if the supplier has not been verified in the previous 12 months. For a company, this includes confirming its incorporation through official records or a certificate of incorporation, verifying the identity of the person acting on its behalf and confirming its actual place of business. For an individual supplier, a valid proof of identity such as an Emirates ID or passport is required. Warning signs include a supplier changing its address or key staff more than twice within 12 months, or transactions that appear out of proportion to its size and history.

Checking the Supply Itself

The Decision also requires checks on the supply. These cover the commercial reason for the transaction, how and to whom payment is made, whether the price is reasonable compared with market rates, whether the goods or services fall within the supplier’s licensed activity and where the goods originated. Payments made in cash, to third parties or to offshore accounts need a clear business justification.

Thresholds and Record Keeping

Supplies below AED 10,000, excluding VAT, may be excluded from verification subject to conditions. This exception does not apply where supplies from the same supplier exceed AED 100,000 over 12 months. Where supplies from one supplier exceed AED 375,000 over 12 months, businesses should also obtain evidence of the supplier’s UAE bank account and review its public reputation. All checks must be documented, and businesses need a written policy naming the people responsible for carrying out, reviewing and supervising the procedures.

What This Means for Businesses

If the required checks are not carried out and a supply is later linked to tax evasion, the FTA may deny the input tax deduction. Businesses should review how they onboard new suppliers, update their procurement and finance policies and keep verification records organised so they can be produced during an FTA review. Clear procedures help protect VAT recovery and support stronger financial controls.