UAE FTA Decision No. 13 of 2026: New Input VAT Supplier Verification Rules Effective 1 October 2026

UAE FTA Decision No. 13 of 2026: New Input VAT Supplier Verification Rules Effective 1 October 2026

Published: 7 September 2026

Quick answer: From 1 October 2026, a valid tax invoice is no longer enough to recover input VAT in the UAE. Federal Tax Authority (FTA) Decision No. 13 of 2026 inserts a new due-diligence requirement into the VAT Law: businesses must verify that a supplier genuinely exists, is properly incorporated, and matches the identity on its invoice, before claiming the VAT charged as input tax. The check must be repeated at least once every 12 months, and suppliers billing you more than AED 375,000 in a rolling 12-month period need enhanced checks such as bank confirmation and reputational screening. Small suppliers billing under AED 10,000 are exempt, unless your running total with that same supplier crosses AED 100,000 in 12 months.

This decision was issued on 22 July 2026 and published on 20 August 2026, giving businesses roughly six weeks of public notice before it takes effect. That is a short runway for a rule that touches every VAT-registered business’s purchase-side compliance, so this article breaks down exactly what changed, who is affected, and what to do before the 1 October 2026 deadline.

Why the FTA Introduced This Rule

The FTA’s stated reasoning is straightforward: fraudulent and fictitious suppliers have been used to generate fake tax invoices, letting the buyer claim input VAT on purchases that never genuinely happened, or that happened with a different, unregistered party issuing invoices under a shell company’s VAT number. Under the old rule, a business only needed a “valid tax invoice” under Article 55 of the VAT Law to recover input tax. Decision No. 13 of 2026 closes that gap by making the buyer partly responsible for confirming the supplier on the invoice is real, properly licensed, and correctly identified.

This mirrors a global trend. Tax authorities in the EU, UK, and GCC neighbours have all moved toward “know your supplier” obligations for VAT recovery over the past several years, specifically to fight missing-trader and carousel-style fraud. The UAE’s version is now formalised through Article 54 bis of the VAT Executive Regulations.

What Article 54 Bis Actually Requires

The new Article 54 bis sets out four core obligations for every VAT-registered business claiming input tax:

1. Verify genuine business existence. Confirm the supplier is a real, operating business, not a paper entity created solely to issue invoices.
2. Verify incorporation and licensing. Confirm the supplier holds a valid trade licence or equivalent registration matching the entity named on the invoice.
3. Verify identity, including for individuals. Where the supplier is a natural person (a freelancer or sole establishment), verify their identity either physically or through an approved virtual/digital identity check.
4. Repeat verification every 12 months. A one-time check at the start of a supplier relationship is not sufficient. Businesses must re-verify each supplier at least once every 12 months for as long as the relationship continues.

On top of these baseline checks, enhanced due diligence applies once a single supplier’s invoiced value to your business exceeds AED 375,000 within a rolling 12-month period. Enhanced due diligence includes:

• Bank account confirmation matching the supplier’s registered legal name.
• Reputational and sanctions-style screening of the supplier entity and its known principals.
• Closer documentation of the underlying commercial relationship (contracts, delivery evidence, correspondence).

The AED 10,000 and AED 100,000 Thresholds

Decision No. 13 of 2026 builds in a proportionality carve-out so micro-purchases do not trigger the full verification burden:

• A single supply valued under AED 10,000 is exempt from the verification requirement.
• However, that exemption disappears once your cumulative purchases from the same supplier exceed AED 100,000 within a rolling 12-month period. At that point, every invoice from that supplier, including ones under AED 10,000, falls back under the verification obligation.

In practice, this means businesses cannot avoid the rule by splitting purchases into small invoices from the same recurring supplier. The FTA is tracking the relationship total, not the invoice-by-invoice value.

Scenario	Verification required?
Single invoice under AED 10,000, supplier’s 12-month total also under AED 100,000	No
Single invoice under AED 10,000, but supplier’s 12-month total exceeds AED 100,000	Yes
Any invoice AED 10,000 or above	Yes
Supplier’s 12-month invoiced total exceeds AED 375,000	Yes, plus enhanced due diligence

Documented Verification Policy Is Now Mandatory

Decision No. 13 of 2026 does not just require businesses to perform the checks. It requires them to have a written, documented verification policy describing how supplier checks are performed, by whom, how often, and how records are retained. In an FTA audit, the absence of a documented policy is itself a compliance gap, separate from whether any individual supplier check was actually done. This aligns with the FTA’s existing emphasis on documented internal controls, seen already in areas like FTA audit powers and record-keeping obligations.

Under the UAE’s general record-keeping requirements, supporting documents (trade licence copies, ID verification records, bank confirmation letters, screening reports) should be retained for the same period as other VAT records, effectively for the statutory retention window rather than discarded once a check is complete.

How This Interacts With Existing Input Tax Rules

This decision sits on top of, not instead of, the existing input VAT recovery framework. It does not change:

• The general eligibility conditions for input tax recovery under the VAT Law.
• The rules on input tax apportionment for businesses making both taxable and exempt supplies.
• The five-year statute of limitations on VAT assessments, covered in our guide to the UAE VAT statute of limitations.
• Reverse charge obligations, covered separately in our guide to the UAE reverse charge mechanism.

What it adds is a new precondition: even a technically valid tax invoice from an unverified or improperly verified supplier can now be challenged by the FTA, putting the input tax claim itself at risk, separate from any question about the invoice’s format or the underlying transaction’s legitimacy.

If a claim is disallowed because supplier verification was missing or inadequate, the business will need to consider whether a voluntary disclosure is appropriate to correct the return before the FTA raises it in an audit, which is generally the lower-penalty path.

Worked Example: How the Thresholds Apply in Practice

Consider a Dubai-based trading company that buys packaging materials from the same local supplier throughout the year. In January, February, and March, it receives three invoices of AED 8,500 each from this supplier, each individually under the AED 10,000 exemption. By April, the cumulative total reaches AED 25,500, still well under AED 100,000, so the exemption still applies and no verification is required yet.

By October, after continuing the same monthly pattern, the cumulative 12-month total from this one supplier crosses AED 100,000. From that point forward, every invoice from this supplier, including the small AED 8,500 ones, requires the standard verification: confirming the supplier is a genuine, operating business, holds a valid trade licence matching the invoice, and that this check has been repeated within the last 12 months.

Now consider a construction company using a specialised subcontractor whose invoices total AED 420,000 over a rolling 12-month period. Because this exceeds the AED 375,000 enhanced due diligence threshold, the construction company must go beyond the baseline verification and also confirm the subcontractor’s bank account matches its registered legal name, run a reputational or sanctions-style screening check, and keep closer documentation of the underlying work performed.

Penalties and Audit Risk for Non-Compliance

Decision No. 13 of 2026 does not introduce a separate, standalone fine specifically for failing to verify a supplier. Instead, the real exposure comes through the existing VAT penalty and audit framework: if the FTA finds during an audit that input tax was recovered without the required supplier verification, it can disallow that input tax claim entirely. A disallowed claim increases the business’s net VAT payable for the relevant period, which then triggers the standard VAT late payment and filing penalties on the shortfall, calculated from the original due date, not from the date the FTA identifies the issue.

This is a meaningfully different, and in some ways more severe, risk than a fixed administrative penalty. A single unverified high-value supplier relationship spanning multiple tax periods could mean input tax across several VAT returns gets reassessed at once, compounding the exposure. This is precisely why the FTA frames this as a due-diligence obligation on the buyer, not merely a documentation formality: getting it wrong affects the tax liability itself, not just a filing checkbox.

Businesses already under FTA review for other matters, or that have previously received FTA audit powers attention, should treat supplier verification as a priority area, since auditors are highly likely to test this specific new requirement given how recently it was introduced.

Who Is Most Affected

Some business types face a heavier practical burden under this rule:

• Businesses with many small, recurring suppliers (retail, F&B, construction subcontracting) will need a systemised way to track supplier-by-supplier rolling 12-month totals, since manual tracking across dozens or hundreds of suppliers is error-prone.
• Businesses using freelancers and sole establishments as suppliers will need an identity verification process for individuals, not just corporate entities, which is a newer requirement for many finance teams.
• High-value procurement functions (suppliers regularly exceeding AED 375,000/year) need to build out the enhanced due-diligence layer, including bank confirmation and screening, likely requiring either a compliance vendor or an internal process upgrade.
• Free zone businesses, including those claiming Qualifying Free Zone Person status for corporate tax, are not exempt from this VAT rule. VAT and corporate tax are separate regimes, and this decision applies under the VAT Law regardless of corporate tax status.

What to Do Before 1 October 2026

1. List every active supplier and calculate each one’s rolling 12-month invoiced total against your business, to identify who crosses the AED 100,000 and AED 375,000 thresholds.
2. Collect and file trade licence copies (or ID verification for individual suppliers) for every supplier above the AED 10,000 per-invoice or AED 100,000 cumulative threshold.
3. Draft a written verification policy stating your process, frequency, and record retention approach. Keep it simple, consistent, and actually followed.
4. Set a 12-month recurring reminder per supplier so re-verification does not lapse silently.
5. Identify suppliers exceeding AED 375,000 and begin the enhanced due-diligence process (bank confirmation, screening) for those specifically.
6. Brief your accounts payable team so verification happens before a purchase invoice is booked and its VAT claimed, not retroactively after an FTA query.

Frequently Asked Questions

Does this apply to all VAT-registered businesses in the UAE?
Yes. Decision No. 13 of 2026 applies to every VAT-registered business claiming input tax recovery, including mainland companies and free zone entities, regardless of size or sector.

What happens if I already claimed input VAT from an unverified supplier before 1 October 2026?
The obligation applies from 1 October 2026 onward. Existing claims made before that date under the prior rules are not automatically invalidated, but you should still begin verifying ongoing supplier relationships now so post-1 October invoices are compliant.

Do I need to verify one-off suppliers I only buy from once?
Yes, if that single invoice is AED 10,000 or more. The exemption only applies when the invoice is under AED 10,000 and your cumulative 12-month spend with that supplier also stays under AED 100,000.

What counts as “enhanced due diligence”?
At minimum, bank account confirmation matching the supplier’s registered legal name, plus reputational or sanctions-style screening. Businesses should document exactly what enhanced checks were performed and when.

Does verifying a supplier once cover the whole relationship?
No. Article 54 bis requires re-verification at least once every 12 months for as long as the supplier relationship continues, not a single check at onboarding.

Is a documented verification policy legally required, or just best practice?
It is required. The FTA can assess whether a documented policy exists separately from whether individual supplier checks were performed, so both elements need to be in place.

How do individual freelancer suppliers get verified under this rule?
Their identity must be confirmed either physically or through an approved virtual/digital identity verification method, in addition to confirming they hold a valid licence or registration to supply the goods or services invoiced.

Can the FTA disallow input tax I already claimed if my supplier verification was incomplete?
Yes, this is the core risk of the decision. An input tax claim can be challenged even where the tax invoice itself is technically valid, if the required supplier verification was not performed or documented.

Does this rule replace the existing tax invoice requirements under Article 55?
No. Article 55’s invoice format and content requirements still apply in full. Decision No. 13 of 2026 adds an additional, separate due-diligence layer on top of the existing invoice rules.

Where can I find the official text of Decision No. 13 of 2026?
The decision is published through the Federal Tax Authority’s official channels and the UAE’s official legislation gazette. Businesses should confirm the exact wording and any FTA public clarification against the official FTA source before finalising internal policy documents.

How Qaspro Global Can Help

Qaspro Global helps VAT-registered businesses across the UAE build the supplier verification process this decision requires, from thresholds tracking to documented policy drafting to enhanced due diligence for high-value suppliers. If you need your input VAT recovery process reviewed before 1 October 2026, contact Qaspro Global on WhatsApp for a compliance review.

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• UAE VAT Voluntary Disclosure 2026
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