From 1 October 2026, a valid tax invoice and a supplier’s TRN are no longer enough on their own to support input VAT recovery in the UAE. Under FTA Decision No. 13 of 2026, businesses must verify both the supplier and the supply before deducting input tax, and keep evidence that the checks were done.
The decision is issued under Article 54(bis) of the UAE VAT Law. That article allows the Federal Tax Authority (FTA) to deny input tax where a supply is linked to tax evasion and the business knew, or should have known, about the link. Decision No. 13 sets out what “reasonable checks” now look like in practice, so a business that cannot show them risks having its input VAT denied.
Why Decision No. 13 matters?
Until now, input VAT recovery has largely depended on holding a valid tax invoice. The new framework moves compliance from a documentation exercise to an active control. If the required checks were not performed, the business may struggle to argue it had no reason to suspect a problem. The result is a direct cost: VAT that was previously recoverable may become an expense.
This makes input VAT a shared responsibility between finance, procurement, and tax teams, not just the VAT return preparer.
What must be verified Before Deducting Input VAT?
1. The supplier
Before dealing with a supplier for the first time, and again if the supplier has not been verified in the previous 12 months, businesses should confirm the following.
On identity, the business should confirm the supplier’s trade license and certificate of incorporation through official databases, along with the Emirates ID or passport of the authorized representative. For an individual or sole establishment, this means the trade license and the owner’s Emirates ID or passport, plus a meeting with the supplier, in person or virtual, before the supply.
On place of business, the supplier should have an actual place of business that suits its activity, confirmed electronically or by a site visit.
On risk indicators, businesses should look for more than two address changes or key-staff changes in 12 months, or transactions that are out of proportion to the supplier’s size. If any indicator is found, a written explanation should be kept.
2. Larger suppliers: Above AED 375,000
Where a supplier is, or is expected to be, above AED 375,000 over the past or next 12 months, two additional checks apply.
The first is written confirmation from a UAE bank of the supplier’s account. The second is a review of publicly available reviews and media, to confirm that the supplier’s size and activity are consistent and that there are no signs of tax evasion.
3. Each supply
Beyond the supplier, each supply needs to make commercial sense.
Businesses should be able to show a genuine commercial reason for the transaction and a price consistent with the market. The goods or services should fall within the supplier’s licensed activity, the origin and ownership of any goods should be established, and any intermediary involved should have a clear reason for being there.
4. Payment
Payment terms should be commercially justified. Third-party payments, or payments to accounts outside the supplier’s country, need an explanation. Payments should be made electronically; where cash is used, the reason should be enquired into and documented, and it should stay within reasonable commercial and legal limits.
When verification can be skipped?
A single supply below AED 10,000 (excluding VAT) does not need to be verified. However, this exception falls away if total supplies from that supplier exceed AED 100,000 in the past or next 12 months. Businesses will therefore need to track spend by supplier, not just by invoice.
Evidence files and a written policy
Every check must be documented, with evidence kept on file. The decision also requires a written verification policy that names who performs, who reviews, and who supervises the checks. Without a policy and an evidence file per supplier, a business may find it difficult to demonstrate compliance during an FTA review.
What businesses should do now?
Businesses should start by ranking suppliers by 12-month spend and flagging those above AED 100,000 and AED 375,000. Identity, license, premises, and authorized-representative checks should then be built into supplier onboarding, with a 12-month re-check. Bank confirmations should be collected from suppliers above AED 375,000, along with a record of the public-information review. A written verification policy and an evidence file for each supplier should be adopted. Finally, existing suppliers need review too, not only new ones, since the 12-month re-verification rule applies to them as well.
How MS can help?
MS can help businesses turn Decision No. 13 into a working compliance process. Our tax team supports supplier risk mapping, verification checklists, tailored verification policies, and a review of input VAT claims from October 2026.
Disclaimer: This article is a general summary of FTA Decision No. 13 of 2026 and does not constitute tax advice or a decision on any specific matter. Please contact us for advice on your specific business model and circumstances.
