UAE Input VAT Verification Rules 2026

Siddharth Ravi
04 Sep 2026

A UAE business pays a supplier's invoice, claims the 5% VAT charged on it as input tax, and moves on. Months later, the FTA opens an audit and finds that supplier was part of a chain used to evade tax. The invoice was valid. The VAT was genuinely paid. The business still loses the input tax deduction – because it never checked who it was dealing with.

Bottom Line – From 1 October 2026, holding a valid tax invoice is no longer enough to claim input VAT. FTA Decision No. 13 of 2026 requires documented proof that you verified your supplier and the supply before deducting input tax, or your claim can be denied under Article 54(bis) of the VAT Law.

Bottom Line

This is not a theoretical risk. Federal Decree-Law No. 16 of 2025 gave the FTA the legal basis to deny input tax recovery where a supply is linked to a tax evasion chain – the kind of scheme where one business in a supply chain never pays the VAT it owes, while everyone downstream keeps recovering input tax on invoices that look perfectly normal. What that law didn't say was how a business, acting in good faith, could prove it had done enough to avoid that outcome.

FTA Decision No. 13 of 2026 answers that question, and it applies to every VAT-registered business in the UAE – there's no exemption by size, sector, or turnover. If your business claims input VAT on goods or services bought from third parties, this changes how you onboard suppliers, review invoices, and process payments, starting with transactions from 1 October 2026.

What changed, exactly?

Article 54(bis) of the VAT Law works in three steps. First, the FTA must reject an input tax deduction where the supply was part of a chain connected to tax evasion and the business knew about it. Second, the FTA can reject the deduction where the business should have known, based on the circumstances. Third – and this is the part that matters operationally – the law says a business is treated as having "should have known" if it didn't verify the supplier and the supply the way the FTA prescribes.

Decision No. 13 of 2026 is that prescription. It doesn't create a new penalty. What it does is remove a defence: without documented verification, a business loses the ability to argue it acted reasonably, even if it never actually knew anything was wrong.

Who has to check what?

The decision splits the work into two parts – checking the supplier, and checking each supply.

Check the supplier (Article 3)	What it requires
Identity – individual supplier	Copy of a valid Emirates ID or passport, plus a meeting (in person or virtual) before the first supply
Identity – company supplier	Incorporation verified against official records or certificate, plus ID of the authorised signatory dealing with you
Place of business	Confirmed to exist, electronically or by a site visit, and consistent with the supplier's declared activity
Risk indicators	No more than 2 changes of address or key personnel in 12 months, and transaction volumes proportionate to the supplier's size and history – otherwise, a documented, justified explanation on file
Bank & reputation check – once supplies from this supplier pass AED 375,000 in 12 months	A written letter from a UAE bank confirming the supplier holds an account there, plus a review of publicly available reviews and media for signs of tax evasion

Check the supply (Article 4)	What it requires
General assessment	A general assessment of the transaction's conditions, and confirmation the supplier's engagement is based on genuine commercial reasons – not paperwork alone
Payment terms	Commercially explainable; a documented reason on file if a third party is involved in payment, or payment goes to an account outside the supplier's home country
Payment method	Electronic where possible; cash needs a documented commercial reason, must stay within legal thresholds, and must be easily verifiable
Pricing & licensing	Prices and margins consistent with the market; goods or services fall within the supplier's ordinary, licensed activity
Origin & ownership	Authenticity, origin and ownership of goods confirmed, along with the supplier's right to dispose of them
Intermediary role	Where the supplier acts as an intermediary, a clear, justifiable commercial reason for that role

How much checking does a given supplier actually need?

Not every purchase needs the full treatment. Three thresholds decide the depth of the check.

Threshold	What it triggers
AED 10,000	Below this value per supply (excl. VAT), the checks can be skipped entirely
AED 100,000	Once a supplier's total supplies pass this over any rolling 12 months, the AED 10,000 exception disappears – every invoice from that supplier needs full verification
AED 375,000	Once a supplier's total supplies pass this over any rolling 12 months, add the bank letter and reputation check on top

Two scenarios show how this plays out. A retailer buys stationery from a new supplier for AED 4,000 – under AED 10,000, no verification needed, full stop. A trading company buys AED 420,000 of goods over the year from one supplier, pays part of it in cash to a bank account held outside that supplier's home country, and never asks why. Under the old rules, a valid invoice was the end of the story. Under Decision No. 13, that trading company needed supplier identity checks, a bank letter, a reputation review, and a documented commercial reason for the cash and the offshore account – none of which it has. If the FTA later finds that supplier connected to a tax evasion chain, the trading company has no defence left.

What records do you actually need to keep?

Article 5 sets the operating rhythm: verify a new supplier before the first deal, re-verify any supplier not checked in the past 12 months, and verify every taxable supply you receive – not just the first one from a new supplier. Every step needs supporting documents on file, in a form the FTA can review. And separately from the checks themselves, the business needs a written policy naming who is responsible for running, reviewing, and supervising the whole process. A business that did every check but never wrote down who owns the process still has a gap.

What the regulations say

Federal Decree-Law No. 16 of 2025 inserted Article 54(bis) into Federal Decree-Law No. 8 of 2017 on Value Added Tax, effective 1 January 2026. FTA Decision No. 13 of 2026 – approved by the FTA Board of Directors at its 45th meeting on 23 June 2026 and issued on 22 July 2026 – sets out the "Measures, Procedures and Conditions required by Taxable Persons for the Verification of the Validity and Integrity of the Supplies before Deduction of Input Tax," and takes effect on 1 October 2026. The decision defines Tax Evasion as "the Person's use of illegal means, resulting in the reduction of the amount of the Due Tax, non-payment thereof, or a refund of Tax that the Person did not have the right to have refunded" – the exact standard your verification records need to protect against.