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September 24, 2026

FTA Decision No. 13 of 2026: The Practical Guide to Supplier Verification Before Claiming Input VAT

Effective 1 October 2026. Every VAT-registered business in the UAE is affected.

A valid tax invoice used to be enough.

From 1 October 2026, it isn’t.

FTA Decision No. 13 of 2026 introduces a new layer of obligation for every taxable person claiming input VAT in the UAE. Before you deduct input tax, you now need to verify the validity and integrity of your suppliers and your supplies, and document that you did it.

This isn’t a bureaucratic technicality. The UAE tax system is maturing, and this decision is part of a deliberate effort to close the loopholes that enable VAT fraud, false invoices, undeclared sales, fictitious suppliers, and unsupported VAT claims. It mirrors approaches already in place in other jurisdictions, including HMRC’s reasonable commercial checks framework in the UK. But the UAE version is more extensive, and it puts significant responsibility on the buyer.

Here’s everything you need to understand, and what to do about it.

Why This Decision Matters

To understand the change, it helps to understand what problem it’s solving.

VAT is designed so that businesses collect tax on their sales, recover tax on their purchases, and pay the FTA the net difference. But the system can be abused. A supplier declares sales of AED 50,000 on which they’ve collected VAT, but only declares AED 20,000 in their VAT return, keeping the rest. Their customer meanwhile claims input VAT based on the full invoice. The result: VAT has been collected but not paid to the government.

This is what tax evasion in the supply chain looks like. And until now, a buyer who had a valid tax invoice had very limited exposure to someone else’s evasion.

Decision 13 changes that. Under the updated Article 54 of the VAT Law, the FTA can now deny input VAT recovery if a purchase is connected to tax evasion and the buyer knew, or should have known, about it.

That second limb is what makes this significant. You don’t have to have participated in fraud. You just have to have failed to take the steps a reasonable business would take to identify that something was wrong.

What Was Required Before, and What’s Changed

Previously, three conditions formed the foundation of input VAT recovery:

A compliant tax invoice. Payment or an intention to pay. A genuine business expense with no personal usage element.

These three conditions haven’t been removed. But Decision 13 adds a new layer on top of them:

A valid tax invoice is no longer enough. You must also verify your supplier’s identity documents. You must refresh these checks annually. You must assess each individual supply, not just the supplier relationship. There are monetary thresholds that determine the extent of the checks required. Cash payments need a documented commercial reason. And a written internal policy must exist naming who performs, reviews, and supervises the verification process.

The Three Thresholds, Explained Simply

Three numbers are central to this Decision. Understanding how they interact is the most important practical exercise any VAT-registered business can do right now.

AED 10,000 per supply (VAT-exclusive)

If the value of a single supply, excluding VAT, is below AED 10,000, that supply is generally exempt from the detailed verification checks on its own.

But this exemption has a catch.

AED 100,000 per supplier (rolling 12 months)

If your total spend with a supplier over any rolling 12-month period reaches or exceeds AED 100,000, the AED 10,000 exemption disappears entirely for that supplier. Every supply from that supplier, however small each individual invoice is, now requires the full verification checks.

This is the threshold most businesses will underestimate. A supplier you pay AED 8,000 a month, AED 96,000 per year, sits just below. One additional small purchase pushes them over, and suddenly every invoice from them is in scope, retroactively.

AED 375,000 per supplier (rolling 12 months)

If your spend with a single supplier exceeds AED 375,000 over the rolling 12-month period, two additional requirements apply on top of everything in the middle tier: a written bank confirmation that the supplier holds a UAE bank account, and a documented review of the supplier’s public reputation.

On the bank confirmation: the Decision specifies that this letter does not need to be addressed to your company. An IBAN verification letter from the supplier’s bank, clearly showing the account details to which you make payment, can satisfy this requirement in practice.

On the reputation review: newspaper coverage, media checks, website review, and online presence are all reasonable approaches. The aim is to identify publicly available negative signals, litigation, regulatory action, and reputational issues that a reasonable business would have found.

How to Verify Your Suppliers

Once you’ve mapped which suppliers fall above AED 100,000 and AED 375,000, the verification work falls into two categories: supplier checks and supply checks.

Supplier Checks, Who You’re Buying From

For a natural person supplier:
Obtain a copy of their Emirates ID or passport. Meet the supplier, in person or virtually, before the supply is made. This meeting requirement is specific to natural persons. It doesn’t apply to companies.

For a legal person supplier:
Verify their company documents through official databases. Obtain the certificate of incorporation and confirm that the entity details, name, address, employees are consistent and accurate. Verify the identity of the director, agent, or employee authorised to represent the supplier.

Place of business verification:
Confirm the supplier has a genuine place of business, either electronically or by a field visit, and that it’s consistent with what they actually do. If a supplier tells you they’re in electronics manufacturing and the address is a consumer goods factory, that’s a red flag worth documenting. A mismatch between the declared activity and the physical premises is exactly the kind of signal this check is designed to surface.

Risk indicators to watch:
Three specific indicators are called out in the Decision. If any of these are present, you need a documented and justified explanation on file:

  • The supplier’s address has changed more than twice in the previous 12 months
  • Key employees or managers have changed more than twice in the previous 12 months
  • Transactions are disproportionate or unexpected given the supplier’s size and history

Spotting a risk indicator doesn’t mean you have to stop dealing with the supplier. It means you need to investigate and document a reasonable explanation.

Supply Checks, What You’re Buying

For every individual supply above the applicable threshold, you need to satisfy yourself about the transaction itself, not just the supplier.

Commercial rationale: Is there a genuine commercial reason for this purchase? Is the supplier’s engagement based on real business need? This is particularly important in procurement and accounts payable processes; anyone bringing suppliers into the business needs to understand the new standard of scrutiny that applies.

Payment method: Payments should be electronic wherever possible. Cash payments require a documented commercial reason, must be verifiable, and must fall within applicable legal thresholds. Third-party and overseas payments need a clear rationale; the days of paying a supplier’s agent and treating it as equivalent to paying the supplier directly are over, at least without proper documentation.

Prices and margins: The prices you pay should not be unjustifiably different from market norms. Goods or services must match the supplier’s licensed activity. For goods, you should verify authenticity, origin, and the supplier’s right to dispose of them. Where the supplier is an intermediary, there should be a documented commercial rationale for their role.

One practical approach to price verification: obtain quotations from multiple suppliers, or check publicly available market prices for comparable goods or services online. For imported goods, customs documentation and detailed goods listings from the supplier are particularly important.

The FTA has signalled that more detailed guidance is expected, similar to how public clarifications developed over time for zero-rated supplies of goods and services. When that guidance arrives, it will likely standardise the evidentiary requirements by industry and transaction type. Until then, documented judgment calls based on the current Decision are the right approach.

What Documentation Must You Keep?

Running the checks is only half the job. The other half is proving you ran them.

Supplier verification files:
 For every supplier above the applicable threshold, maintain a file containing their identity documents, company incorporation records, place of business confirmation, risk indicator assessment and any explanations, and, for suppliers above AED 375,000, the bank confirmation and reputation review.

This file needs to be established on your first dealing with the supplier, and refreshed every 12 months. A 12-month verification cycle isn’t optional, the requirement recurs annually regardless of how long the relationship has existed.

Supply-level documentation:
 For each supply above the threshold, document the commercial rationale, confirm the payment method is appropriate, and note any checks on pricing, licensed activity, and authenticity of goods. This should be built into your AP process rather than treated as a separate exercise.

The written verification policy:
 Article 5(4) of Decision 13 requires every business to have a written policy in place before the Decision takes effect. This policy must name who implements the verification procedures, who reviews them, and who supervises them, with clear powers and responsibilities assigned.

This document is not filed with the FTA. But it must exist and be maintained with your tax records. It is the first thing an FTA officer can request to see, and the absence of it is itself a compliance failure.

Practical Steps to Take Right Now

Step 1: Map your active suppliers
 Pull a rolling 12-month purchase report by supplier. Identify everyone above AED 100,000 and AED 375,000. This is your starting point and it determines the scope of everything that follows. Note: the look-back from 1 October already extends to October 2025, the data you need is historical, not future.

Step 2: Build supplier verification files
 For every supplier above AED 100,000: identity documents, company records, place of business confirmation, risk indicator notes. For every supplier above AED 375,000: add the bank confirmation and reputation review. Start with your highest-spend suppliers and work down.

Step 3: Introduce a 12-month refresh cycle
 One-off verification isn’t enough. Build a recurring annual review into your supplier management process. Systems that flag document expiry, trade licences, Emirates IDs, passports, are particularly useful here given that the FTA is already tightening its stance on expired documents in registration and deregistration processes.

Step 4: Embed supply-level checks into your AP process
 Commercial rationale, payment method, pricing, and licensed activity checks need to become part of the standard invoice approval workflow. They won’t get done consistently if they sit outside the existing process.

Step 5: Draft and approve the written policy
 Name the right people. Match the document to how your procurement and finance functions actually operate. A template policy with the wrong names or the wrong process is worse than no policy at all, if it doesn’t reflect how the business actually works, it won’t survive FTA scrutiny.

Step 6: Move cash payments to electronic methods
 Or, where cash remains necessary, document the commercial reason. This is particularly relevant for businesses with significant petty cash purchasing.

A Note on Scope

This applies to every taxable person claiming input VAT, with no sector exceptions and no free zone carve-out. It also applies to foreign suppliers, because the Decision’s definition of input tax specifically includes tax due when conducting an import. For reverse charge supplies from overseas suppliers, the verification checks do apply is the understanding.

There are no specific financial penalties attached to Decision 13 itself. The consequence of non-compliance is the denial of input VAT recovery, which, for businesses with significant supplier spend, is materially punitive in its own right.

How Nishe Can Help

This is detailed, judgment-based compliance work that requires someone to actually sit down with your supplier and purchase data, understand your procurement processes, and build a verification framework that fits how your business actually operates.

We can help with the rolling 12-month supplier analysis, drafting the Article 5(4) written policy, reviewing your existing supplier files against the new requirements, and building the supply-level checks into your AP process.

Watch the full webinar recording on our YouTube channel

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