On 22 July 2026 the Federal Tax Authority issued Decision No. 13 of 2026, setting out the checks a business is expected to carry out on its suppliers and its purchases before it recovers the VAT paid on them. It takes effect on 1 October 2026, and turns what many businesses treat as good housekeeping into a documented requirement.
The Decision in One Line
Before you claim input VAT on a purchase, you need to have satisfied yourself that the supplier is genuine and that the transaction is genuine — and you need to be able to show the FTA how you satisfied yourself.
Put plainly: a tax invoice in your file is no longer the end of the story. The story now includes what you knew about the person who issued it.
Who Needs to Care About This?
Anyone registered for VAT, or required to be registered, who claims input tax on purchases. It applies to the supplies you receive, so this is an accounts-payable topic rather than a sales one. If your finance team pays supplier invoices and recovers the VAT on them, the Decision lands on their desk.
Step 1 — Know Who You Are Buying From
The first set of checks is about establishing that your supplier actually exists and is who they say they are:
- If the supplier is an individual — keep a copy of a valid Emirates ID or passport, and meet them, either face to face or over a video call, before the supply takes place.
- If the supplier is a company — confirm the company really is incorporated, either through official databases or by taking a copy of the incorporation certificate, and check that the details line up with the entity’s name, address, staff and other information you hold. Also keep an ID copy of the director, agent or employee who is authorised to deal with you.
- Check where they operate from — confirm they have a real place of business, either electronically or by visiting it, and satisfy yourself that the premises make sense for the kind of work they do. A trading company with a warehouse-sized turnover and no warehouse is the point of this test.
Step 2 — Watch for Three Warning Signs
The Decision names three red flags you are expected to look for:
- The supplier has changed its address more than twice in the last 12 months.
- The supplier has changed its key people — its managers, or the contacts you actually deal with — more than twice in the last 12 months.
- The supplier is doing business that looks out of proportion to its size or its trading history, in volume, value or nature.
A red flag does not mean you have to walk away. It means you need a clear, reasoned explanation on file for why you are comfortable, ready to hand to the FTA if asked, and consistent with everything else you know about the supplier.
Step 3 — Extra Checks for Your Bigger Suppliers
Where the value of supplies you receive from a supplier is above AED 375,000 over the previous 12 months, or you expect it to be over the next 12 months, two further checks apply:
- Obtain a written confirmation from an authorised bank in the UAE that the supplier holds a bank account, with no reservations or conditions attached to it. Helpfully, the confirmation does not have to be addressed to you.
- Look the supplier up. Review publicly available reviews and media coverage from reliable sources, along with client references where you can get them, and satisfy yourself that what you find matches the nature and size of their business and shows no sign of tax evasion.
Step 4 — Check the Deal, Not Just the Supplier
The second half of the Decision moves from the supplier to the transaction. In substance, you are being asked whether the deal makes commercial sense:
- Is there a genuine commercial reason for it? Assess the circumstances of the supply and satisfy yourself the supplier is in the transaction for real business reasons.
- Pay electronically. Cash is not banned, but it needs a documented commercial reason, has to stay within the limits set in the tax legislation, and must be easy to trace.
- Watch unusual payment routes. Third parties paying or collecting, or payment into an account outside the supplier’s country of incorporation, need a sensible commercial explanation that does not contradict what you already know.
- Sense-check the pricing and the licence. Prices and margins should not be commercially unjustifiable or noticeably out of line with the market, and what is being supplied should sit within the supplier’s ordinary activity and commercial licence.
- For goods, check the goods. Confirm they are authentic, confirm where they came from, and confirm the supplier owns them or has the right to sell them.
- Understand the middleman. Where the supplier is an intermediary, there should be a clear reason for their role in the chain.
Step 5 — Write It Down, and Say Who Owns It
Documentation is where most of the practical work sits:
- Run the supplier checks when you deal with a supplier for the first time, and again on repeat dealings if you have not verified that supplier in the last 12 months.
- Run the transaction checks on each taxable supply you receive or accept.
- Keep a record of the steps taken and the supporting documents, so the FTA can see the checks were carried out properly.
- Maintain a written policy naming the people responsible for carrying out, reviewing and supervising the checks, with their powers and responsibilities set out clearly, kept wherever you keep your tax records.
The Small-Value Let-Off — and Its Catch
You can skip these checks where the consideration on a supply, excluding VAT, is under AED 10,000 — which takes most everyday small purchases out of scope. The catch is that the relief falls away where supplies received from that supplier exceed AED 100,000 over the previous 12 months, or are expected to over the next 12. The test is the relationship, not the invoice: a supplier billing AED 4,000 a month stays inside the relief; the same supplier at AED 10,000 a month does not.
What This Means in Practice
Five questions worth putting to your finance team before 1 October:
- Do we have a supplier onboarding file — ID, incorporation, address confirmation — or just a trade licence copy taken at some point in the past?
- Which suppliers cross AED 375,000 a year, and do we hold a bank confirmation for each of them?
- Which suppliers sit above AED 100,000 a year, so the small-value relief no longer helps us?
- Are we paying anyone in cash, through a third party, or into an account outside their country of incorporation — and is the reason documented?
- Do we have a written verification policy naming who performs, reviews and supervises the checks?
Two Scenarios
Scenario 1 — the small recurring supplier
A company buys stationery from a local supplier, roughly AED 3,000 an invoice and around AED 45,000 a year. Each supply is under AED 10,000 and the yearly relationship stays under AED 100,000, so the checks can be set aside — provided the company can show the spend data that puts it inside the relief, and revisits the position if the spend grows.
Scenario 2 — the large subcontractor with an overseas account A contractor engages a subcontractor for around AED 900,000 of work a year, and is asked to pay into an account outside the subcontractor’s country of incorporation. The relationship is well above AED 375,000, so the full supplier checks apply — bank confirmation and reputational review included — and the payment route needs a documented commercial explanation. Far easier to assemble before the invoices are paid than during an FTA review.
Most of this is what a careful finance function already does when taking on a new supplier. What changes on 1 October 2026 is that the checks have to be consistent, documented, owned by named people and retrievable — so the businesses that struggle will be the ones with good controls they never wrote down. There is still time to build a short verification checklist, run the supplier ledger against the two thresholds, and put a one-page policy in place.
Disclaimer
This article summarises Federal Tax Authority Decision No. 13 of 2026 on the verification of supplies before deduction of Input Tax, based on an unofficial translation, and is provided for general information only. It does not constitute professional tax or legal advice. Tax laws and their interpretation by the FTA are subject to change.
