The UAE Federal Tax Authority (FTA) has issued Decision No. 13 of 2026, establishing new procedures for taxable persons to verify the validity and integrity of supplies before claiming Input VAT deductions.
Issued on 22 July 2026, the Decision is scheduled to take effect from 1 October 2026.
The new requirements place greater emphasis on supplier due diligence, transaction validation, and maintaining sufficient evidence to support Input VAT recovery.
Key Verification Requirements
Taxable persons will be expected to implement appropriate procedures covering the following areas:
1. Supplier Verification
Businesses should take reasonable steps to confirm the supplier’s legal identity, incorporation or registration details, and the authority of the individual representing the supplier.
2. Verification of Business Operations and Premises
Appropriate checks should be performed to establish that the supplier has an actual place of business and that its business operations appear consistent with the nature of the supplies being provided.
3. Identification and Assessment of Risk Indicators
Businesses should monitor for unusual circumstances, significant changes, or other indicators that may raise concerns about a supplier or transaction. Where necessary, the reasons for proceeding with a transaction should be properly documented.
4. Additional Checks for Higher-Value Suppliers
Where the value of supplies from a supplier exceeds, or is expected to exceed, AED 375,000 within a 12-month period, additional verification measures may be required. These include checking relevant bank account information and reviewing appropriate publicly available information about the supplier.
5. Transaction-Level Verification
Businesses should assess whether a transaction has a genuine commercial basis. This may include reviewing the commercial rationale, pricing, payment terms and arrangements, and evidence supporting the actual supply of goods or services.
6. Documentation and Internal Procedures
Taxable persons should maintain adequate records of the verification procedures undertaken and establish clear internal responsibilities for carrying out, monitoring, and supervising these controls.
Exception for Certain Lower-Value Supplies
In general, the verification requirements do not apply to individual supplies with a value below AED 10,000, excluding VAT.
However, this exception may not be available where the total value of supplies received from the same supplier exceeds, or is expected to exceed, AED 100,000 during a 12-month period.
What This Means for UAE Businesses
The Decision represents a significant development in the UAE’s approach to Input VAT recovery. Businesses may need to strengthen their existing vendor onboarding, procurement, accounts payable, tax, and VAT control procedures to ensure that sufficient verification is performed before Input VAT is claimed.
With the new requirements taking effect from 1 October 2026, businesses should consider reviewing their current processes and implementing appropriate policies, controls, documentation standards, and internal responsibilities in advance.
How We Can Help
AZ Advisory Services can assist businesses in reviewing their existing VAT and supplier verification procedures, identifying potential gaps, and developing practical controls to support compliance with the new requirements.
Reach out to our team to discuss how FTA Decision No. 13 of 2026 may affect your business and your Input VAT recovery procedures.
