The Federal Tax Authority has issued Decision No. 13 of 2026, introducing new requirements for verifying suppliers and supplies before input VAT is deducted.
From 1 October 2026, a valid tax invoice will no longer be sufficient on its own to support input VAT recovery. VAT-registered businesses must also demonstrate that they completed the required supplier and transaction checks.
This shifts VAT recovery from an invoice-based to an evidence-based approach, requiring formal onboarding, ongoing monitoring and documented processes.
What supplier checks are required?
Verification must be completed when first dealing with a supplier and repeated if it has not been completed during the previous 12 months.
Checks may include:
- Verifying the supplier's identity or legal incorporation and any authorised representative
- Checking its address and actual place of business
- Confirming its premises and activities align with the goods or services supplied
- Assessing risk indicators, including changes to its address or key personnel
- Considering whether transactions are proportionate to its business
Where a risk indicator is identified, the business must retain a clear and reasonable explanation.
Every transaction must also be reviewed
Businesses must consider each taxable supply before recovering the related input VAT. Checks include whether:
- The transaction has a genuine commercial purpose
- Pricing or profit margins are commercially reasonable
- The goods or services align with the supplier's usual and licensed activities
- Payment methods and terms are commercially justifiable
- Cash, third-party or overseas payments have a documented commercial explanation
- The authenticity, origin and ownership of goods can be supported where relevant
These checks must form part of the ongoing purchasing and accounts-payable process, rather than a once-a-year exercise.
The thresholds businesses need to know
Supplies below AED 10,000
Checks can generally be omitted where an individual taxable supply is below AED 10,000, excluding VAT. This exemption is unavailable if total supplies from that supplier exceed, or are expected to exceed, AED 100,000 over a rolling 12-month period.
Supplier spend above AED 100,000
Once the AED 100,000 rolling threshold is crossed or expected to be crossed, the exemption for supplies below AED 10,000 no longer applies. This equates to average supplier spend of approximately AED 8,334 per month.
Supplier spend above AED 375,000
Where supplies exceed, or are expected to exceed, AED 375,000 over a rolling 12-month period, additional checks are required. These include confirmation from an authorised UAE bank that the supplier holds an account and a review of publicly available information from reliable sources.
All thresholds operate on a rolling 12-month basis, rather than by calendar or financial year.
Documentation is essential
Businesses must retain evidence showing how the checks were completed for each relevant supplier and transaction.
They must also maintain a policy identifying who completes, reviews and supervises the checks; each person's responsibilities and authority; and where records are retained.
If a supply is later linked to tax evasion, the FTA may deny input VAT recovery where the business knew, or should have known, of that connection. This includes cases where the prescribed verification was not completed before the input VAT was claimed.
Which businesses should pay particular attention?
The changes are especially relevant to businesses with high-value or frequent supplier relationships; no formal onboarding or accounts-payable checks; supplier records more than 12 months old; cash, third-party or overseas payments; or processes that rely primarily on a valid tax invoice.
What should businesses do now?
Businesses should review supplier records and spend over a rolling 12-month period. Immediate priorities include:
- Identifying suppliers approaching the AED 100,000 and AED 375,000 thresholds
- Refreshing supplier information more than 12 months old
- Updating onboarding and accounts-payable procedures
- Establishing a verification checklist and assigning responsibility
- Documenting unusual payments and retaining accessible evidence
What this means for TLB clients
Where TLB assists with bookkeeping, purchase-invoice processing or VAT returns, clients may need to confirm that the checks have been completed before the related input VAT is claimed.
Depending on our agreed scope, we may request supporting documents and help identify suppliers approaching the thresholds.
Businesses should not wait until their next VAT return is due. Establishing a clear process now will help protect future input VAT claims and reduce the risk of missing documentation.
