Input VAT recovery in the UAE: new supplier and supply verification rules from 1 October 2026

FTA Decision No. 13 of 2026 explained for UAE businesses, viewed through your accounts payable process, supplier files and VAT records.

UAE input VAT supplier verification: the update in brief

• From 1 October 2026, a business must verify both the supplier and the supply before deducting input VAT. The requirements come from Federal Tax Authority Decision No. 13 of 2026, issued on 22 July 2026.
• Supplier checks: identity, a verified place of business, and an assessment against three named risk indicators. Where supplies from that supplier exceed AED 375,000 over the previous 12 months, or are expected to exceed AED 375,000 over the next 12 months, a bank confirmation and public-source review are added.
• Supply checks: genuine commercial reasons for the supplier’s involvement, payment terms that make commercial sense, and circumstances that hold up on price, licensed activity, origin of goods and any intermediary role.
• Process: verify a supplier on first dealing and again on a recurrent dealing where it has not been verified in the previous 12 months, verify each supply received or accepted, document the steps, retain the records, and maintain a written policy naming who performs, reviews and supervises the checks.
• Exception: the measures may be disregarded where the consideration for a supply, excluding VAT, is less than AED 10,000, unless 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.
• Consequence: if the relevant supply or supply chain is related to Tax Evasion, failure to perform the prescribed verification means you are deemed, for purposes of Article 54(bis)(2), to have been required to be aware of that relationship. Performing the checks avoids that deeming rule, but does not create a statutory safe harbour.

Most finance teams treat input VAT as an invoice question. The invoice arrives, it carries a TRN, the VAT line is there, the amount goes into the return. From 1 October 2026, that is no longer the whole of the job.

The Decision does not change what input tax is recoverable, or when it may be deducted. It adds a prescribed verification process, and a supporting evidence framework, around the supplier and the supply before input tax is deducted. The statutory verification requirement was introduced into the VAT Law with effect from 1 January 2026; Decision No. 13 of 2026 now sets out the measures, procedures and conditions for carrying it out.

If the Authority asked next month how you satisfied yourself that this supplier and this supply were genuine, what would you be able to send?

Level one: verifying the supplier (Article 3)

• For a natural person, valid proof of identity such as an Emirates ID or passport, and a meeting with the supplier, in person or virtually, before the supply is made. For a legal person, incorporation verified through official databases or a certificate of incorporation matching the entity name, address and employees, plus identification for the director, agent or employee authorised to represent it.
• Place of business. Confirm an actual place of business exists, through appropriate electronic means or a field visit, and that it fits the activities the supplier carries out.
• Risk indicators. Three are named: address changed more than twice in the previous 12 months; key employees, meaning managers or the people you deal with, changed more than twice in the same period; or transactions disproportionate or unexpected in volume, value or nature against the size and history of the business. If one applies, you are not barred from dealing with that supplier, but you must retain a clear and justified explanation, ensure it does not contradict the evidence or information available to you, and submit it to the Authority on request.
• Banking and public-source checks, above a threshold. Where supplies received from a supplier exceed AED 375,000 over the previous 12-month period, or are expected to exceed AED 375,000 over the next 12 months, you must also obtain written confirmation issued by an authorised bank in the State confirming 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, including whether they are consistent with the nature and size of the supplier’s business and whether they indicate suspected Tax Evasion. The confirmation does not need to be issued to the recipient of the supply.

Level two: verifying each supply (Article 4)

The second level applies to the supplies you receive, and asks three things of each one: that the supplier is in the transaction for genuine commercial reasons, that the payment terms make commercial sense, and that the circumstances of the supply hold up.

• Where a third party is involved in making or receiving payment, or payment goes to a bank account outside the supplier’s country of incorporation, there must be a reasonable commercial explanation that does not contradict the evidence available to you. Consideration is to be paid by electronic means. Cash payment must rest on a documented commercial reason, sit within the thresholds in the applicable tax legislation, and be easily verifiable.
• Prices or profit margins that are not commercially unjustifiable or significantly different from market conditions without a clear reason; goods or services within the supplier’s ordinary activities or activities it is licensed to carry out under its commercial licence; the authenticity and origin of goods, and the supplier’s ownership or right to dispose of them; and, where the supplier is an intermediary, a clear explanation of its role.

Article 5 sets the rhythm. Verify a supplier on first dealing, and again on recurrent dealings where it has not been verified in the previous 12 months. Verify each Taxable Supply received or accepted. Document the steps and retain the records so the Authority can confirm they were carried out correctly. And maintain a documented policy identifying who implements, reviews and supervises the procedures, with their powers and responsibilities set out clearly.

How the AED 10,000 exception operates

The exception operates at two levels. The verification measures may be disregarded for a Taxable Supply where its consideration, excluding VAT, is less than AED 10,000. The exception is unavailable, however, where the total value of supplies received from the same supplier exceeds AED 100,000 over the previous 12 months, or is expected to exceed AED 100,000 over the next 12 months.

Both limbs of the AED 100,000 test matter. It looks backwards over a rolling 12-month period and forwards over the next 12 months, so a supplier can come into scope as spend accumulates or as commitments are made, not only after the fact. Repeated low-value supplies from a supplier who stays below that level can still fall within the exception.

What happens if you do not complete the supplier and supply verification

The Decision takes its force from Article 54(bis) of the VAT Law. The Authority must reject an input tax deduction where the supply was part of a supply or chain of supplies related to Tax Evasion and the Taxable Person was aware of that relation, and may reject it where the person should, based on the circumstances of the supply, have been aware.

Where the prescribed verification was not performed, the Taxable Person is deemed to have been required to be aware of that relationship. That is the practical cost of skipping the checks. Performing them removes the deeming rule, but does not create a statutory safe harbour: the Authority may still reject a deduction where the circumstances establish that the person should have been aware, and must reject it where actual awareness is established.

Risk-managed transition position. The Decision takes effect on 1 October 2026 and contains no express transitional provision for supplies received before that date. Where input tax will first be deducted on or after 1 October 2026, businesses should consider completing the applicable verification before deduction, particularly for active suppliers, pending any further FTA clarification. This is a risk-managed reading, not a confirmed statutory transitional rule.

Why this matters for UAE businesses

In many businesses, accounts payable is the least documented process in finance. Sales has contracts and a pipeline, payroll has files, purchasing often has an email thread and a bank transfer. This Decision asks the buying side of the ledger to carry an audit trail closer to the one you already keep on the revenue side. Three situations deserve early attention.

• Free zone and mainland alike. The Decision applies to Taxable Persons in relation to supplies they receive, without distinguishing free zone from mainland.
• Groups with centralised payments. Where a parent, treasury function or paying agent settles a UAE entity’s invoices, or payment goes to an account outside the supplier’s country of incorporation, a commercial explanation is expected on file. Arrangements that feel ordinary inside a group can look unexplained from outside it.
• Higher-value suppliers. Where supplies received from a supplier exceed AED 375,000 over the previous 12 months, or are expected to exceed that amount over the next 12 months, additional verification requirements apply, including the prescribed bank confirmation and public-source review.

What this changes in your books and files

Supplier onboarding stops being an administrative task and becomes a finance control. For transactions to which the verification requirements apply, the supplier file should contain the evidence appropriate to the supplier type: identity or incorporation verification, identification of the authorised representative where applicable, place-of-business verification, the supplier risk assessment and, where the AED 375,000 threshold applies, the additional banking and public-source checks.

• Retain the evidence in a secure supplier file with appropriate access controls, linked or referenced from the supplier record in Xero or your accounting system, so it sits with the ledger rather than in someone’s inbox.
• Record each supplier’s last verification date and trigger re-verification on a recurrent dealing where the supplier has not been verified within the previous 12 months. A calendar reminder can support the control, but the trigger is the dealing, not the date.
• Depending on the transaction, useful supporting evidence may include purchase orders, contracts or scope confirmations, delivery or service-completion evidence, payment approvals and correspondence supporting unusual commercial terms. The Decision does not prescribe a fixed supporting-document list; the records retained should demonstrate how the required verification steps were performed.
• Add rolling 12-month supplier-spend reporting and forward-looking monitoring based on contracts, purchase commitments and reasonably expected spend, so suppliers expected to cross AED 100,000 or AED 375,000 are identified in advance.
• Write the required policy, naming who performs the checks, who reviews them and who supervises the process.

The same file earns its keep more than once. It may also support the expense evidence behind your Corporate Tax return and your wider audit and accounting documentation.

What to review now

1. Pull rolling 12-month supplier spend and flag suppliers above, or expected to pass, AED 100,000 and AED 375,000.
2. Check what you hold for your largest suppliers: incorporation or identity evidence, identification of the authorised representative, place-of-business verification, bank details.
3. Identify suppliers paid through a third party or into an account outside their country of incorporation, and record the commercial reason now.
4. List the cash payments still running through the business and decide which move to electronic settlement before 1 October 2026.
5. Compare what you buy from each supplier against the activities on its commercial licence, and confirm you can explain the role of any intermediary.
6. Decide who owns the process internally, then draft the verification policy.

Recommended next steps

• Set an internal go-live date ahead of 1 October 2026, so the first verified supplies are not the ones you scramble over.
• Fold verification into the purchase-to-pay workflow rather than running it as a separate compliance exercise.
• Brief the people who actually onboard suppliers, usually operations and procurement, not only finance.
• Where a risk indicator applies to a supplier you still want to work with, document the justification at the time, not afterwards.

Frequently asked questions

Does FTA Decision No. 13 of 2026 apply to my business?

It applies to Taxable Persons in relation to verifying the validity and integrity of the supplies they receive before deducting input tax. If you are VAT registered and you recover input tax, plan on the basis that it applies to you from 1 October 2026, subject to the AED 10,000 exception.

If we do not carry out the checks, will our input tax be rejected?

Not automatically. Under Article 54(bis)(2) of the VAT Law, the Authority must establish that the relevant supply was part of a supply or chain of supplies related to Tax Evasion. Where the prescribed verification was not performed, however, Article 54(bis)(3) deems the Taxable Person, for the purposes of Article 54(bis)(2), to have been required to be aware of that relationship. The Authority may then reject the deduction. Where actual awareness is established, rejection is mandatory under Article 54(bis)(1).

How often do we need to re-verify a supplier?

Supplier verification is required on first dealing, and on recurrent dealings where the supplier has not been verified over the previous 12 months. Supply-level verification applies to each Taxable Supply received or accepted.

How Audiix helps

Audiix can review the VAT treatment, accounts payable controls, supplier-verification process and supporting tax records, help design the documented policy the Decision requires, and support clients in FTA tax matters within the permitted scope of tax-agent services. Where an issue involves criminal exposure, litigation or non-tax legal matters, specialist legal counsel should be involved.

A second pair of eyes before 1 October 2026. If you would like to know whether your supplier files and accounts payable records are strong enough to support your input VAT position, Audiix can review the process as a VAT health check or as part of your monthly accounting and compliance plan.