From 1 October 2026, UAE businesses face new checks before claiming Input VAT.
Input VAT means the VAT your business pays to suppliers and later claims back.
FTA Decision No. 13 of 2026 sets out new requirements for supplier and transaction verification.
The change affects more than your VAT return. It reaches into procurement, supplier onboarding, Accounts Payable, finance, and payment processes.
For many businesses, a correctly prepared tax invoice will no longer tell the whole story.
You also need evidence showing who you bought from and why the transaction was genuine.
The Decision was issued on 22 July 2026 and takes effect from 1 October 2026.
Why Has the FTA Introduced These New Checks?
The new rules sit under Article 54(bis) of the UAE VAT Law. That Article deals with transactions connected to tax evasion.
Its purpose is important.
Imagine hiring a new employee. You would not normally rely only on the name written on their CV. You would check their identity, experience, references, and whether the information makes sense.
The FTA now expects a similar mindset when businesses claim VAT on supplier purchases.
If a supply forms part of a chain connected to tax evasion, your knowledge becomes important.
If you knew about that connection, the Input VAT deduction can be rejected.
The FTA may also reject it when the circumstances show you should have known.
Decision No. 13 defines the checks businesses should perform when assessing that risk.
There is an important distinction here.
Missing one verification step does not automatically prove your supplier committed tax evasion. The FTA must still establish the relevant connection to tax evasion.
However, failing the prescribed checks can seriously weaken your position.
You may struggle to argue that you could not reasonably have known about the problem.
For businesses, the safer approach is straightforward.
Do the checks before claiming the VAT. Keep evidence showing that you did them.
What Are the Three VAT Supplier Thresholds?
The new FTA decision uses three important numbers.
These numbers determine how much supplier verification your business may need.
- AED 10,000 per supply: Verification may be disregarded when a taxable supply is below AED 10,000, excluding VAT. Conditions apply.
- AED 100,000 per supplier: The AED 10,000 exception disappears when supplier spending crosses this annual level.
- AED 375,000 per supplier: Additional verification applies, including UAE bank confirmation and public-information checks.
There is one important detail.
The AED 100,000 and AED 375,000 tests look both backwards and forward over 12 months.
You cannot simply wait until your accounting system indicates you have crossed the threshold.
Why the AED 10,000 Exception Can Be Misleading
Suppose you receive a monthly invoice for AED 8,500. Every individual invoice is below AED 10,000.
You might assume the small-value exception always applies. But twelve monthly invoices total AED 102,000.
Once your supplier relationship exceeds the AED 100,000 threshold, the exception may no longer apply.
So think about the supplier relationship, not only the individual invoice.
What Supplier Checks Do Businesses Need to Carry Out?
How Should You Verify Your Supplier?
Supplier verification applies when you work with a supplier for the first time. It also applies when an existing supplier has not been verified during the previous 12 months.
Think of this as a yearly supplier health check.
What If Your Supplier Is an Individual?
You need valid proof of identity, which can include an Emirates ID or a passport.
You must also meet the supplier before the supply takes place. That meeting can happen physically or virtually.
What If Your Supplier Is a Company?
The checks go further.
You should verify the company’s incorporation through official sources.
Alternatively, obtain its incorporation certificate.
You must also verify the person authorised to represent that supplier. That could be a director, agent, or employee.
You also need to verify the supplier’s actual business location. The location should make sense for the activity they claim to perform.
For example, imagine a supplier claims to operate a large wholesale business. Their registered location points to a place that cannot reasonably support that activity.
That does not automatically prove wrongdoing. But it is something your business should investigate.
What Supplier Red Flags Should You Watch For?
The FTA also identifies several risk indicators.
Businesses should look for situations where a supplier:
- changed its business address more than twice during the previous 12 months;
- changed key employees more than twice during that period; or
- completed transactions that seem unusual for its business size or history.
A red flag does not automatically mean you must reject the supplier.
You need a clear and justified explanation for the unusual situation.
You should also keep that explanation in your records.
However, this creates an interesting practical problem.
How would your finance team know how often a supplier changed its managers?
You may not find that information through a normal internet search.
For important suppliers, businesses may need stronger onboarding forms.
Supplier declarations could also become useful.
Contracts may also require suppliers to notify you about major business changes.
What Happens When Supplier Spending Exceeds AED 375,000?
The rules become more detailed for higher-value supplier relationships.
Additional checks apply when purchases from one supplier exceed AED 375,000 during the previous 12 months.
They also apply when purchases are expected to exceed that amount during the next 12 months.
The supplier must provide written confirmation from an authorised UAE bank, and that confirmation must show that the supplier has a bank account.
The decision also requires a review of publicly available information, including relevant reviews and reliable media coverage.
You should assess whether the public information aligns with the supplier’s business size and activities.
You should also look for signs of suspected tax evasion.
This means your accounting system needs more than invoice-level visibility.
Finance teams should track total spend by supplier.
Waiting until VAT return preparation may be too late.
How Do You Verify the Transaction and Keep Evidence?
Why Is Supplier Verification Only Half the Process?
A legitimate company can still be involved in an unusual transaction.
That is why Decision No. 13 separates two issues.
First, is the supplier genuine?
Second, does this specific transaction make commercial sense?
The FTA requires businesses to verify each taxable supply, subject to the applicable exception.
Here are the main questions your finance team should ask.
- Does the transaction have a real business reason?
You should understand why the purchase took place.
You should also understand why this particular supplier was involved.
A vague invoice description may not be enough. Contracts, quotations, purchase orders, and correspondence can help explain the transaction.
- Does the price make sense?
The FTA expects businesses to consider market conditions.
An unusual price does not automatically create a problem. But a major difference should have a clear commercial explanation.
For example, a supplier may charge more for urgent delivery. A specialist provider may charge a premium for rare expertise.
Both can be reasonable.
The key is explaining why.
- Does the supplier actually perform that activity?
The goods or services should match the supplier’s normal and licensed activities.
Imagine hiring a marketing agency for office construction work. That mismatch should trigger questions.
The same principle applies when the transaction appears outside the supplier’s normal operations.
What Additional Checks Apply to Goods?
Companies purchasing physical goods need additional evidence.
They should verify:
- whether the goods are authentic;
- where the goods originated;
- whether the supplier owns them; and
- whether the supplier has the right to sell them.
These requirements can matter heavily for trading and wholesale businesses.
They can also affect complex supply chains.
The aim is simple: Your business should understand what it bought, where it came from, and who had the right to sell it.
What Do the New Rules Mean for Supplier Payments?
Payment is another major part of the new verification framework.
The new FTA decision states that payment for the supply should be made electronically.
That makes bank transfers and other traceable electronic methods increasingly important.
Cash is not completely banned. However, a cash payment needs a documented commercial reason.
It must also meet applicable tax-law thresholds.
The payment must remain easy to verify. This could require real operational changes for cash-heavy businesses.
A casual “we normally pay this supplier in cash” explanation may not be enough, and finance teams should review these arrangements before October.
How Should You Handle Third-Party Payments?
Suppose Company A sends you the invoice. Then Company A asks you to pay Company B.
That may be legitimate.
Perhaps Company B is its parent company or authorised collection agent.
But your file should explain the arrangement.
The same issue can arise when payment goes outside the supplier’s country of incorporation.
The FTA expects a reasonable commercial explanation in these situations.
A useful rule is: When the money does not follow the obvious route, document why.
What Should You Check When Intermediaries Are Involved?
Some supply chains naturally include distributors, brokers, agents, and other intermediaries.
That is not a problem by itself. However, the supplier’s role should have a clear commercial reason.
Your business should understand why the intermediary sits between you and the original supplier. You should be able to explain that structure if the FTA asks.
Again, this is about substance. The FTA wants businesses to understand the transactions supporting their VAT claims.
How Should Businesses Document and Prepare for the New Rules?
What Records Should You Keep to Support Your VAT Claims?
Performing the checks is only part of the job.
You also need proof.
Decision No. 13 requires businesses to document their verification steps. Supporting documents and records must also be retained. The FTA should be able to assess whether the process was implemented correctly.
Depending on the transaction, your supplier file may include:
- identity documents;
- trade license or incorporation documents;
- authorised representative details;
- proof of business address;
- supplier declarations;
- contracts and purchase orders;
- quotations;
- tax invoices;
- delivery records;
- evidence of completed services;
- bank and payment records;
- market-price comparisons; and
- explanations for unusual transactions.
The goal is not to create a folder full of random documents.
Each document should help explain who the supplier is and why the transaction is genuine.
Does Your Business Need a Supplier Verification Policy?
This requirement can easily be overlooked.
The FTA requires businesses to maintain a documented supplier verification policy. The policy should identify who performs the checks. It should also identify who reviews and supervises them. Roles, responsibilities, and authority should be clearly defined.
For a larger business, the process might look like this:
Procurement → Supplier onboarding → Accounts Payable → Finance review → VAT claim
For a smaller company, fewer people may handle those steps.
That is fine. The important point is that responsibilities should still be clear.
What Happens If Your Business Fails to Carry Out the Checks?
This is where the cash-flow risk becomes real.
Businesses normally recover eligible Input VAT by deducting it through their VAT returns. That recovery reduces the net VAT cost of doing business.
Now imagine a major supplier relationship generates AED 200,000 of Input VAT. If that deduction becomes disputed, the cash-flow effect can be significant.
Under Article 54(bis), Input VAT can be rejected where a supply belongs to a chain connected with tax evasion.
The business’s knowledge of that connection matters.
If you knew, the FTA can reject the deduction.
If you should have known, the deduction may also be rejected.
Failure to carry out the Decision No. 13 checks can affect that “should have known” assessment.
So the real risk is not simply: “We forgot some paperwork.”
It is: “Can we defend the VAT we already claimed?”
That is why this change deserves attention from business owners, not only accountants.
What the New Rules Do Not Mean
There are several easy ways to misunderstand the Decision.
“Every supplier must be checked before every invoice.”
Not exactly.
Supplier verification applies on first dealing and again when the 12-month refresh becomes relevant. The transaction itself must be reviewed for each taxable supply, subject to the exception.
“Every invoice below AED 10,000 is exempt.”
No. The AED 100,000 supplier threshold can remove that exception.
“A supplier red flag means I cannot work with them.”
Not necessarily. A genuine commercial explanation may address the risk indicator. Keep that explanation documented.
“Completing the checklist guarantees my VAT claim.”
Not completely. Compliance helps protect your position. But it cannot protect a business that actually knew a transaction was connected to tax evasion.
Which Businesses Need to Pay Particular Attention?
The decision applies to taxable persons claiming Input VAT.
However, some businesses will feel the operational impact more than others.
Pay particular attention if you have:
- hundreds of active suppliers;
- large Input VAT claims;
- high-value purchases;
- regular trading transactions;
- frequent new vendors;
- complex supply chains;
- third-party payment arrangements;
- cash supplier payments; or
- several departments approving purchases.
A business with ten suppliers may manage this through a simple register, whereas a company with 2,000 suppliers needs a different approach.
Automation and accounting-system controls may become important.
How Can Your Business Prepare Before 1 October 2026?
How Can Your Finance Team Prepare Before 1 October 2026?
The effective date is close. Your business does not need to redesign everything overnight.
Start with these three steps.
1. Map and classify every active supplier
Export your supplier list. Calculate historical and expected spending over 12 months. Then place suppliers into the relevant categories:
below AED 10,000 per transaction, above AED 100,000 annually, or above AED 375,000 annually.
Also flag suppliers with missing verification information.
2. Fix your onboarding and payment process
Create one standard supplier verification file. Collect identity, incorporation, address, representative, and risk information.
Add enhanced checks for suppliers crossing AED 375,000.
Review cash payments and unusual bank arrangements.
Build transaction checks into purchase approval.
Do this before the invoice reaches the VAT return.
3. Document who checks what
Prepare the internal verification policy required by the Decision. Assign responsibility across procurement, Accounts Payable, finance, and tax.
Set reminders for the 12-month supplier refresh. Keep supporting evidence with each supplier file. That way, your team can show what was checked and when.
Getting Your VAT Process Ready
These new rules affect more than the person filing your VAT return.
They can change how your business approves suppliers, records purchases, makes payments, and keeps supporting documents.
That means the biggest risk is not waiting until the VAT return is due.
It is discovering too late that the supplier checks or transaction records were never completed properly.
At Vista Financials Accounting and Taxation, we can help businesses review their current VAT and supplier-verification processes before the new requirements take effect.
That can include:
- reviewing supplier onboarding and verification procedures;
- identifying suppliers that may require enhanced checks;
- checking whether current records support Input VAT claims;
- reviewing payment and documentation processes;
- helping define internal roles and verification responsibilities; and
- identifying gaps that should be addressed before 1 October 2026.
The aim is simple: make sure the right checks happen before the transaction reaches the VAT return.
Because once VAT has already been claimed, fixing a weak process can become much more difficult.
