Until now, many businesses have approached input VAT with a fairly straightforward process:
We received the goods or services. We have the tax invoice. We paid the supplier. So we claim the input VAT. From 1 October 2026, businesses will need to look a little deeper. The Federal Tax Authority has issued Decision No. 13 of 2026, introducing specific measures for verifying suppliers and supplies before deducting input VAT. This does not mean businesses need to turn every purchase into a lengthy investigation. But it does mean that supplier onboarding and VAT review can no longer be treated as a simple invoice-checking exercise. The basic idea is:
Know who you are buying from, understand the transaction, look into anything unusual, and keep evidence of the checks you performed.
Here is what businesses should practically consider.
1. Know Your Supplier
When you start dealing with a supplier, make sure you know who you are actually dealing with. For a company, this means checking its incorporation or licensing details and identifying the person authorised to represent it. You should also verify that the supplier operates from a location that makes sense for the type of business it claims to conduct. Depending on the circumstances, this can be done electronically or through a physical visit where appropriate. In practice, your supplier file may contain the trade licence or incorporation documents, authorised-person details and evidence of the business-location check. The purpose is not simply to collect another set of documents.
It is to answer a basic question:
Does this appear to be a genuine business capable of making the supply?
2. Don't Ignore Red Flags
Most normal suppliers should not create major concerns. But sometimes something does not add up. For example, a supplier may have changed its address several times. Its key personnel may keep changing. Or a relatively small business may suddenly start issuing unusually large invoices. The Decision specifically identifies circumstances of this nature as matters to consider during the verification process. A red flag does not automatically mean that something is wrong.
But it does mean you should ask the question, understand the reason and keep the explanation. Ignoring something obviously unusual is where the risk starts.
3. Remember AED 375,000
There is one number finance teams should remember:
AED 375,000
If supplies from a supplier exceed, or are reasonably expected to exceed, AED 375,000 over a 12-month period, additional verification measures apply. These include obtaining confirmation that the supplier maintains a UAE bank account and checking available public information, including reviews and media coverage, for potential tax-evasion indicators. For businesses with hundreds of suppliers, this should ideally not be tracked manually.
Your accounting system or supplier register should flag vendors approaching the threshold so the additional checks can be completed on time.
4. Look at the Transaction, Not Just the Supplier
Suppose the supplier is genuine.
Trade licence? Checked.
Office? Checked.
Bank account? Checked.
Does that mean every invoice should automatically pass?
No.
The transaction itself also needs to make commercial sense.
For example:
- Why is the company purchasing these goods or services?
- Is the pricing commercially reasonable?
- Why is payment being requested to a third party?
- Why is the supplier asking for payment into an overseas bank account?
- Is what you are purchasing consistent with the supplier’s business activity?
- And does the supplier have the appropriate licence for that activity?
For an ordinary transaction, this may be very straightforward. Where something unusual appears, however, the business should understand and document the reason rather than simply processing the invoice.
5. If You Checked It, Keep the Evidence
This may ultimately be the most important practical change. Imagine an FTA review two years later and your finance team says:
“Yes, we checked the supplier.”
The obvious next question could be:
“Can you show us what you checked?”
That is why documentation matters. The Decision requires businesses to document their verification procedures, retain supporting records and establish responsibility for who conducts, reviews and supervises the process. Businesses therefore do not need an unnecessarily complicated file.
A practical supplier file could contain:
- Trade licence/incorporation and authorised-person details
- Business address/activity verification
- Bank confirmation and public checks where the AED 375,000 threshold applies
- PO/agreement, invoice, delivery or service evidence and payment proof
- A simple verification checklist showing who performed and reviewed the checks
The quality of the verification matters more than the size of the file.
What Happens If the Checks Are Not Done?
This is an area where businesses should be careful not to overinterpret the Decision. It would be too broad to say that one missing document automatically means the input VAT is permanently lost. However, the Decision requires the prescribed verification measures to be undertaken before input VAT is deducted. From an internal-control perspective, therefore, the safer approach is straightforward:
If the required verification is incomplete, place the related input VAT claim on hold until the checks are completed and properly documented.
This gives the business a much more defensible position than claiming the VAT first and trying to reconstruct the verification later.
Will E-Invoicing Replace These Checks?
Businesses should not assume that it will. E-invoicing and supplier verification address different parts of the process. An electronic invoice can improve the integrity, standardization and reporting of invoice information. But it does not necessarily answer questions such as:
- Why did you enter into this transaction?
- Why is the pricing unusual?
- Why was somebody else paid?
- Is the supplier genuinely capable of providing what was invoiced?
Over time, technology should make some of these compliance checks easier and more automated. But the commercial judgement behind supplier and transaction verification is still important.
What Should Businesses Do Before 1 October?
There is no need to create a huge compliance department for this. Start with four things:
Verify the Supplier → Check the Risk → Verify the Transaction → Keep the Evidence
- Review your supplier onboarding process.
- Identify suppliers likely to cross the AED 375,000 threshold.
- Create a simple verification checklist.
- Define who prepares, reviews and supervises it.
And make sure the process is working before 1 October 2026, rather than discovering the requirement when the first VAT return is being prepared.
Conclusion
The practical change introduced by FTA Decision No. 13 of 2026 can be summed up with one question. Previously, when an invoice reached the accounts team, the main focus may have been:
“Is the tax invoice correct?”
Going forward, businesses should also be comfortable answering:
“Do we understand the supplier and the transaction behind this invoice — and can we prove the checks we performed?”
That is the real compliance shift. Not more paperwork for the sake of paperwork.
Better verification, better documentation and a more defensible input VAT position.
How RVG Can Help You?
RVG Chartered Accountants can assist businesses in reviewing their existing VAT and supplier-onboarding processes and implementing a practical framework for FTA Decision No. 13 of 2026, including supplier verification checklists, internal policies, threshold monitoring and staff guidance.
For assistance with implementation, contact our UAE Tax team.
Disclaimer: This article is intended for general information only and does not constitute tax advice. The appropriate verification procedures should be determined based on the facts, circumstances and risk profile of each business and transaction.
