Verifying suppliers before you deduct input VAT: what FTA Decision No. 13 of 2026 requires

From 1 October 2026, every business that deducts input VAT in the UAE must check its suppliers and the supplies it receives before it claims that tax back. The rules are set out in Federal Tax Authority Decision No. 13 of 2026, issued on 22 July 2026. This article explains what the decision requires, when the checks apply, and how to organise them without slowing down your purchasing.

Why this decision matters

The decision gives practical content to Article 54 (bis) of the VAT Law. That article allows the Federal Tax Authority (FTA) to refuse a deduction of input tax where the supply was part of a supply or a chain of supplies connected with tax evasion:

• the FTA must refuse the deduction if the business was aware of the connection when it deducted the tax;
• the FTA may refuse it if the business should have been aware of the connection, given the circumstances of the supply.

The key point is the last link in that chain. Under Article 54 (bis), a business that did not verify its supplies in line with the measures, procedures and conditions set by the FTA is treated as one that should have been aware. Decision No. 13 of 2026 is that set of measures. Following it is therefore the practical way to protect your input tax.

Who must apply the checks

The decision applies to every Taxable Person, which it defines as any person registered, or obliged to register, for VAT. It covers the verification of the supplies they receive before they deduct input tax.

Step 1: verify the supplier

Identity

• Supplier is an individual: obtain a copy of a valid identity document, such as an Emirates ID or a passport, and meet the supplier, in person or virtually, before the supply.
• Supplier is a company or other legal person: verify its incorporation through official databases or obtain a copy of its certificate of incorporation. The details must be valid and match the entity’s name, address, employees and other related information. Also verify the identity of the manager, agent or employee authorised to represent the supplier, with a copy of a valid identity document.

Address and place of business

Confirm that the supplier has an actual place of business, using suitable electronic means or a field visit, and that the place of business fits the nature of the supplier’s activities.

Risk indicators

Check that none of the following applies:

• the supplier changed its address more than twice in the previous 12 months;
• the supplier changed its key employees (its managers, or the people you deal with) more than twice in the previous 12 months;
• the supplier carried out transactions that are disproportionate or unexpected in volume, value or nature compared with the size and history of its business.

If an indicator does apply, you are not automatically barred. You must keep a clear, justified explanation and give it to the FTA on request, and the explanation must not contradict the evidence and information you hold.

Larger suppliers: bank confirmation and public information

Where the supplies you received from a supplier exceeded AED 375,000 over the previous 12 months, or are expected to exceed AED 375,000 over the next 12 months, you must also verify that the supplier has a bank account and review client recommendations where they are available, as follows:

• obtain a written confirmation from a bank authorised in the UAE that the supplier has a bank account, without reservations or conditions (the letter does not have to be addressed to you);
• review publicly available reviews and media coverage of the supplier from reliable sources, and confirm that they are consistent with the nature and size of its business and show no indicator of suspected tax evasion.

Step 2: verify each supply

Article 4 of the decision requires checks on the supply itself:

• Commercial substance: assess the conditions of the transaction and make sure the supplier’s involvement rests on genuine commercial reasons.
• Payment: the payment method and terms must be commercially justifiable. If a third party pays or receives the money, or payment goes to a bank account outside the supplier’s country of incorporation, there must be a reasonable commercial explanation. Consideration should be paid by electronic means. Cash is acceptable only with a documented commercial reason, within the limits set by the tax legislation, and in a form that can easily be verified.
• Price and margin: check that they are not commercially unjustifiable, or significantly different from market conditions without a clear reason.
• Scope of activity: check that the goods or services fall within the supplier’s ordinary activity and the activities on its commercial licence.
• Goods: check their authenticity and origin, and the supplier’s ownership of them or its right to dispose of them.
• Intermediaries: if the supplier acts as an intermediary, there must be a clear and justifiable commercial explanation for its role.

Step 3: build the procedure into your process

Article 5 sets out how the checks must be organised:

• verify a supplier when you first deal with it, and again on later dealings if it has not been verified in the previous 12 months;
• verify each taxable supply you receive or accept;
• document the steps you took and keep the supporting documents and records, so that the FTA can check them;
• keep a documented policy that names the people who carry out, review and supervise the checks, with their powers and responsibilities, at the place where you keep your required records.

The small-supply exception

You may disregard the checks for a taxable supply whose consideration, excluding VAT, is less than AED 10,000. The exception does not apply where the total value of supplies from that supplier exceeded AED 100,000 over the previous 12 months, or is expected to exceed that amount over the next 12 months.

A practical checklist

Where to start

Start with the suppliers that matter most to your input tax: list them by annual value, flag those above AED 375,000 and those above AED 100,000 with small invoices, and complete their files first. Then write the policy and build the per-invoice checks into your approval workflow, so that the evidence is created as you buy rather than reconstructed later.

You can read the full decision, with the official Arabic text and the FTA’s English translation, in our legislation library.

Tags FTA decisions Input tax