UAE VAT Supplier Verification: What Changed from 1 October 2026?

GetMyAccounting Editorial Team | 8 October 2026 | 16 min read
Reviewed by: Vipul Gupta, Accounting & Tax Consultant

From 1 October 2026, UAE VAT-registered businesses must verify their suppliers and the supplies received before deducting input VAT, subject to specified exceptions. The framework is set out in FTA Decision No. 13 of 2026 and is based on Article 54(bis) of the UAE VAT Law.

Quick Answer: From 1 October 2026, UAE VAT Supplier Verification requirements under FTA Decision No. 13 of 2026 require taxable persons to check their suppliers and the supplies received before deducting input VAT, subject to specified exceptions. Businesses must document these checks and maintain a written policy assigning responsibility for the verification process.

Input VAT is the VAT your business pays on purchases. Eligible input VAT can be deducted from the VAT collected on sales.

Source: FTA UAE – VAT Legislation

Important Legal Point

Failing to complete supplier verification does not, by itself, prove tax evasion. Article 54(bis) applies where the relevant supply or supply chain is connected with tax evasion. However, failure to perform the prescribed checks can cause the business to be treated as having been required to know about that connection.

Specifically: where a supply is connected to tax evasion and the business knew, input VAT must be rejected. Where it should have known, the FTA may reject the deduction. Not performing the required verification can count against the business under the "should have known" test.

The change introduces a documented verification process covering supplier identity, transaction circumstances and payment arrangements.

The decision was issued on 22 July 2026. It implements the verification framework under Article 54(bis) of the UAE VAT Law, which deals with input VAT recovery on supplies connected to tax evasion.

For businesses, the change means that VAT review must extend beyond checking the purchase invoice. The supporting records should also establish that the supplier exists, the transaction has a genuine commercial purpose and the payment arrangement is reasonable.

The main requirements are:

• Verify the supplier's identity, business premises and relevant risk indicators.
• Assess the commercial circumstances of each taxable supply.
• Review payment arrangements and document unusual transactions.
• Apply the small-value exception and additional checks correctly.
• Retain evidence and maintain a written verification policy.

This decision concerns input VAT verification. It does not introduce a VAT rate increase or automatically make previously ineligible expenses recoverable.

Businesses can refer to the FTA's VAT legislation resources for the underlying decision and its requirements.

Verification Thresholds – At a Glance

Full threshold detail and worked examples appear in the thresholds section below.

The decision applies to taxable persons in relation to supplies they receive before deducting input VAT. A taxable person includes someone registered or required to register under the applicable VAT law.

The requirements are relevant when a business:

• Deducts eligible purchase VAT in its VAT return.
• Builds up a recoverable VAT balance.
• Applies for a refund of eligible excess VAT.

Example: Trading company

A trading company collects AED 12,000 VAT from customers and deducts AED 8,000 eligible purchase VAT. Supplier verification is relevant even though the company pays the net balance and does not request a cash refund.

UAE VAT Supplier Verification involves confirming who the supplier is, who represents it and whether it has an actual place of business consistent with its activities. The identity checks differ depending on whether the supplier is an individual or a company.

If the Supplier Is an Individual

Obtain a copy of valid identity evidence, such as an Emirates ID or passport. The decision also requires meeting the supplier, either in person or virtually, before the supply is made.

Example: Individual supplier – service engagement

A business engages an individual supplier for a service. A video meeting and valid identity evidence can form part of the required verification. Keep a record of the meeting and the documents reviewed.

If the Supplier Is a Company

Verify the company's incorporation through official databases or obtain a copy of its incorporation certificate. Confirm that the details are valid and consistent with the entity you are dealing with.

Also obtain valid identity evidence for the director, agent or employee authorised to represent the supplier.

Example: Company name mismatch

Your purchase order identifies ABC Trading LLC, but the supplier submits incorporation documents for XYZ Trading LLC. Ask for clarification and supporting evidence rather than assuming both names refer to the same legal entity. Registering or invoicing the vehicle in the company's name does not automatically create a right to recover input VAT – normal recovery conditions still apply.

Verify the Business Premises

Confirm that the supplier has an actual place of business. This can be checked using appropriate electronic means or through a field visit.

The premises should also make sense for the supplier's activities. For example, a supplier claiming to manufacture goods should be able to explain where that manufacturing takes place.

A physical visit is not automatically required for every supplier. What matters is completing the permitted verification and retaining evidence of the checks.

Supplier verification is required when dealing with a supplier for the first time. For repeat dealings, verification must be performed where the supplier has not been verified during the preceding 12 months.

Example: Long-standing supplier

Your business has used the same packaging supplier since 2023. If the supplier has not been verified during the previous 12 months, review its current details and retain the updated evidence.

A practical supplier register can include:

Review the following supplier risk indicators when they apply, and retain a clear, justified explanation consistent with the available evidence:

• The supplier changed its address more than twice during the previous 12 months.
• Its key employees – such as managers or the people your business deals with – changed more than twice during that period.
• Its transactions are unexpected in volume, value or nature compared with its business size and trading history.

Where an indicator applies, retain a clear and justified explanation that is consistent with the available evidence. The explanation must be available to the FTA on request.

Example: Multiple address changes

A supplier changes premises several times because it is consolidating warehouses. Supporting lease records and a credible explanation may help establish the commercial reason.

Example: Unusually large shipment

A small supplier with limited trading history offers an unusually large shipment. Ask how it can fulfil the order and obtain supporting information.

A risk indicator does not automatically prove tax evasion. However, an unanswered question should not be treated as a completed verification.

Businesses must assess each taxable supply received or accepted, subject to the prescribed exception. The review should establish whether the transaction, pricing, supplier involvement and goods or services make commercial sense.

Commercial Purpose

Consider why the purchase is being made and why that supplier is involved.

Example: Production materials

A manufacturer purchases materials needed for a production order. The purchase order and production requirement can help explain the transaction's commercial purpose.

Pricing and Profit Margins

Check whether prices or margins are commercially unjustifiable or significantly different from market conditions without a clear reason.

Example: Substantial discount

Goods are offered at a substantial discount. A documented clearance sale, bulk-purchase agreement or discontinued product line may explain the price. An unusually low price without supporting reasons needs further review.

Supplier's Activities

Confirm that the supply falls within the supplier's ordinary activities and the activities it is licensed to carry out.

Example: Unlicensed activity

A supplier licensed for an unrelated activity offers specialised industrial equipment. Clarify its authority and role before treating the transaction as verified.

Goods' Origin and Ownership

For goods, verify authenticity, origin and the supplier's ownership or right to dispose of them.

Purchase records, distribution agreements or other relevant evidence may help, depending on the transaction.

Intermediaries

If the supplier acts as an intermediary, there should be a clear commercial explanation for its role.

Example: Distributor arrangement

A distributor arranges delivery directly from a manufacturer. The distribution agreement and order records can help explain why the distributor invoices the buyer even though another entity delivers the goods.

The decision prescribes electronic payment as the standard. Review whether any unusual payment arrangement has a reasonable commercial explanation.

Electronic Payments

Keep payment evidence that can be connected to the supplier, invoice and transaction.

Example: Bank transfer reference

A bank transfer reference identifies the invoice being settled. This helps the accounts team reconcile the payment with the purchase records.

Cash Payments

Cash payments must have a documented commercial reason, comply with applicable tax-law thresholds and be easily verifiable.

Example: Urgent cash purchase

Where an urgent purchase is paid in cash, keep the reason, invoice, payment acknowledgement and evidence of receipt. The explanation does not, by itself, guarantee VAT recovery.

Separate Cash-Payment Rule (effective 1 October 2026)

Separate from FTA Decision No. 13 of 2026, the amended UAE VAT Executive Regulation also restricts input VAT recovery on cash-paid supplies above an amount to be specified by the Minister of Finance. As of the date of this article, the specific Ministerial threshold has not yet been officially published. Businesses should not confuse this future Ministerial cash threshold with the AED 10,000 supplier-verification exception under Decision No. 13.

Source: UAE Ministry of Finance – VAT Executive Regulation Amendments

Third-Party or Overseas Accounts

A reasonable commercial explanation is required where a third party is involved in payment or receipt, or where payment goes outside the supplier's country of incorporation.

Example: Group company payment

A supplier requests payment to its group company. Obtain supporting authorisation and an explanation of the arrangement. A payment instruction alone may not explain the commercial basis.

UAE VAT Supplier Verification includes an exception for certain small-value supplies and additional checks for higher-value suppliers. Businesses must consider both the individual supply and their actual or expected purchases from the same supplier.

Example: One-off purchase below AED 10,000

A business buys office equipment for AED 8,000 excluding VAT. Its purchases from that supplier do not exceed AED 100,000 in the previous 12 months and are not expected to exceed that amount in the next 12 months. The small-value exception may apply. Normal input VAT recovery conditions still need to be satisfied.

Example: Repeated monthly purchases

A business expects to purchase AED 9,000 of materials monthly from one supplier. The expected 12-month total is AED 108,000. Each supply is below AED 10,000, but the expected supplier total exceeds AED 100,000. The small-value exception is therefore unavailable.

Example: Higher-value supplier

A business expects to purchase AED 400,000 from a supplier during the next 12 months. It must apply the additional checks, even if previous purchases were below AED 375,000.

These periods are rolling 12-month periods, rather than simply calendar-year totals.

Boundary point: Exactly AED 10,000 does not meet the "below AED 10,000" condition. The cumulative conditions use "exceeds," so businesses should apply the wording carefully.

Obtain written confirmation issued by an authorised UAE bank confirming that the supplier has a bank account. It must not include relevant reservations or conditions.

The confirmation does not need to be addressed specifically to the buyer.

Also assess available public reviews and media coverage from reliable sources. Consider whether the information is consistent with the supplier's nature and size and whether it indicates suspected tax evasion.

These supplier-purchase thresholds should not be confused with VAT registration thresholds.

The rules concern verification before input VAT deduction. Their effect can therefore arise when a business offsets purchase VAT against sales VAT, as well as when it requests a refund.

Article 54(bis) addresses supplies connected to tax evasion. Where the business knew about that connection, input VAT deduction must be rejected. Where it should have known, the FTA may reject the deduction. Failure to perform the prescribed verification can count against the business under the "should have known" test.

A supplier's mistake does not automatically mean every buyer loses its refund. The connection to tax evasion, knowledge test and transaction facts matter.

Example: Effect on a refundable position

If AED 1,000 of the input VAT is disallowed, eligible input VAT falls to AED 4,000. The net refundable position becomes AED 1,000.

Refunds require a separate application. GetMyAccounting VAT Refund Services UAE can assist with the EmaraTax VAT311 process and supporting documentation.

Businesses must document the verification steps taken and retain supporting records so that the FTA can check their implementation. A written policy must identify the people responsible for implementing, reviewing and supervising the procedures, with clear powers and responsibilities.

A practical supplier file can contain:

• Incorporation and applicable identity evidence.
• Premises verification records.
• Risk indicators and supporting explanations.
• Applicable bank confirmation and public-information reviews.
• Purchase orders, contracts and tax invoices.
• Delivery or service-completion evidence.
• Payment records and unusual-payment explanations.
• Verification dates and reviewer details.

Example: Responsibility allocation

Procurement collects supplier documents, accounts checks payment and purchase totals, and a designated reviewer assesses unresolved questions before the VAT claim is finalised. This is an illustrative allocation of responsibilities, not a prescribed staffing structure. Each business should define roles suitable for its operations.

Businesses reviewing their current controls can use VAT Compliance UAE Services to assess input VAT eligibility, transaction documents and matters needing further clarification.

Introduce UAE VAT Supplier Verification into procurement and accounts processes. For businesses with an uncertain VAT position, a transaction-specific review can help avoid an unsupported VAT claim in the return.

• Review existing supplier files and verification dates.
• Track purchases from each supplier over rolling 12-month periods.
• Estimate expected purchases when assessing thresholds.
• Assign responsibility for supplier and transaction checks.
• Document exceptions and commercial explanations.
• Review supporting evidence before deducting input VAT in the VAT 201 return.

This keeps the verification process connected to everyday purchasing rather than leaving it until a refund request or FTA enquiry.

For VAT 201 filing support, see VAT Return Filing Services UAE.

For guidance on complex or uncertain transaction treatment, VAT Consultancy Services UAE is available.

A complete VAT file should explain the supplier, the purchase and the payment. Where information is missing or inconsistent, seek clarification and assess its effect on the input VAT claim.

For businesses reviewing their supplier verification process, VAT compliance support can help assess the current controls, identify gaps and review transaction documents before the next VAT return.

Is a Valid Tax Invoice Enough to Claim Input VAT After 1 October 2026?

No. A valid tax invoice remains a necessary condition, but it is no longer sufficient on its own. From 1 October 2026, businesses must also complete supplier and supply verification before deducting input VAT, as required by FTA Decision No. 13 of 2026.

Do Existing Suppliers Need to Be Verified Again?

Yes. Repeat dealings require verification where the supplier has not been verified during the preceding 12 months. Businesses should review all existing supplier files and update verification records accordingly.

Do UAE Businesses Need to Physically Visit Every Supplier?

Not automatically. A physical visit is one permitted method, but appropriate electronic means can also be used to verify business premises. What matters is completing the permitted verification and retaining evidence of the checks performed.

Is Every Purchase Below AED 10,000 Exempt from Verification?

No. The exception is unavailable where supplies from the same supplier exceed AED 100,000 in the previous 12 months or are expected to exceed it in the next 12 months. Businesses must assess both the individual supply value and the cumulative supplier total.

Are Cash Payments Completely Banned Under the New Rules?

No. Cash payments are not prohibited, but they require documented commercial justification, compliance with applicable thresholds and verifiable evidence. Note also that a separate rule under the amended VAT Executive Regulation restricts input VAT recovery on high-value cash-paid supplies above a Ministerial threshold to be published.

Does a Supplier Warning Sign Automatically Block Input VAT Recovery?

A warning sign does not itself establish fraud or automatically block input VAT recovery. The decision requires a clear, justified explanation where specified indicators apply. An unanswered warning sign, however, should not be treated as a completed verification.

Does Completing Supplier Verification Guarantee Input VAT Recovery?

No. UAE VAT Supplier Verification supports the input VAT claim, but existing recovery conditions and the facts of the supply still apply. Completing verification reduces risk under the "should have known" test in Article 54(bis) but does not override other recovery conditions.

Disclaimer: This article provides general information and is not transaction-specific tax or legal advice. The FTA-hosted English version of Decision No. 13 of 2026 is labelled an unofficial translation. Consult the applicable Arabic legislation and obtain professional advice where interpretation is required.

Written by: GetMyAccounting Editorial Team
Reviewed by: Vipul Gupta, Accounting & Tax Consultant
Last Updated: 3 October 2026
Contact: +971 55 395 0456 | hello@getmyaccounting.ae

Official & Related Sources

• FTA UAE – VAT Legislation (Decision No. 13 of 2026)
• UAE VAT Executive Regulation – Article 54(bis)
• Ministry of Finance – VAT Executive Regulation Amendments
• GetMyAccounting – VAT Compliance Services UAE
• GetMyAccounting – VAT Return Filing Services UAE
• GetMyAccounting – VAT Consultancy Services UAE
• GetMyAccounting – VAT Refund Services UAE

GetMyAccounting provides accounting, VAT, corporate tax, advisory and compliance support for UAE businesses.