Executive Summary
FTA Decision No. 13 of 2026 enters into force on 1 October 2026. From that date, holding a valid tax invoice is no longer, on its own, sufficient to recover input value added tax (VAT) in the United Arab Emirates - a taxable person must also show that it checked the supplier and the transaction behind that invoice.
A supply, in UAE VAT law, means the disposal of goods in a manner that transfers the right to dispose of them as an owner, or the provision of any service, for consideration and in the course of business. Decision No. 13 of 2026 requires that this underlying supply - not merely the invoice describing it - can be shown to be genuine.
In short: from 1 October 2026, a business that claims input VAT in the UAE must be able to document that it checked both the supplier and the supply. The depth of that check scales with three thresholds - AED 10,000, AED 100,000 and AED 375,000 - and a failed check can end in the Federal Tax Authority (FTA) rejecting the deduction outright.
This article covers: the legal basis and timeline behind the decision; who must verify suppliers; what the verification actually requires for individuals and companies; the AED 10,000, AED 100,000 and AED 375,000 thresholds that scale the obligation; what happens when a business fails to verify; a practical step-by-step approach; and common mistakes that cost businesses their input tax recovery.
What Is FTA Decision No. 13 of 2026
The decision applies to every VAT-registered business in the United Arab Emirates that claims input tax on supplies received, regardless of sector or emirate. It is most consequential for businesses with a large or changing supplier base - trading, construction, retail and import-heavy sectors in particular - because the verification obligation applies supplier by supplier, not once for the whole business.
Legal Basis: From Article 54 Bis to Decision No. 13
Decision No. 13 of 2026 does not stand alone. It implements a new anti-evasion provision - Article 54 bis - inserted into Federal Decree-Law No. 8 of 2017 on VAT (the UAE VAT Law) by Federal Decree-Law No. 16 of 2025. Article 54 bis gives the FTA the power to reject recovery of input tax where a supply, or a chain of supplies, is connected to tax evasion and the taxable person knew, or should have known, of that connection. Decision No. 13 of 2026 is the FTA's detailed rulebook for what a taxable person must do to show it did not know and could not reasonably have known.
1 Jan 2026
Article 54 bis takes effect
Federal Decree-Law No. 16 of 2025 inserts Article 54 bis into Federal Decree-Law No. 8 of 2017 on VAT, giving the FTA power to deny input tax linked to evasion.
22 Jul 2026
FTA issues Decision No. 13
The FTA issues Decision No. 13 of 2026, setting the verification measures, procedures and conditions required under Article 54 bis.
1 Oct 2026
Decision enters into force
Verification applies to input tax claimed on supplies received from this date onward.
Who Must Verify Suppliers Before Deducting Input Tax
Every taxable person registered for VAT in the UAE who claims a deduction for input tax on a supply received is within scope. The obligation is not limited to large businesses or to particular free zones - it applies wherever input tax is recovered, whether the supplier is on the mainland, in a free zone such as DMCC or IFZA, or overseas and subject to reverse charge. A VAT compliance function that already tracks supplier data for other purposes is the natural place to build this control.
What the Verification Covers: The Supplier and the Supply
Decision No. 13 of 2026 sets two distinct checks that run on two different clocks: supplier verification looks at the counterparty and is repeated periodically, while supply verification looks at the individual transaction and applies every time a qualifying supply is received.
| Check | What it verifies | How often it runs |
|---|---|---|
| Supplier verification | The counterparty itself - identity or incorporation, business premises, risk indicators and, above AED 375,000 a year, its bank account and public record. | Once on first dealing with the supplier, then at least once every 12 months for as long as the relationship continues. |
| Supply verification | The individual transaction - commercial rationale, pricing, licensed activity, title to the goods and the payment trail. | For every qualifying supply received from that supplier, unless the AED 10,000 exemption applies. |
Checking the supplier
| Supplier type | Verification required |
|---|---|
| Natural person | A valid Emirates ID or passport, plus a physical or virtual meeting with the supplier before the first supply is accepted. |
| Legal entity | Verification of incorporation details through official databases (trade licence and registration number) and identity verification of the authorised signatory or representative dealing with the transaction. |
| Both | Confirmation of an actual business premises, by electronic check or field visit; a review of risk indicators such as more than two changes of registered address or key personnel within 12 months; a check that transaction volumes are consistent with the supplier's declared business profile; and confirmation that payment methods and terms are commercially justified. |
Checking the supply
| Element | What must be checked |
|---|---|
| Commercial rationale | The supply has a genuine business reason and is not a paper transaction with no economic substance. |
| Pricing | Price and margin are consistent with market conditions for that good or service. |
| Licensed activity | The supply matches the activity stated on the supplier's trade licence. |
| Title and origin | The taxable person can show a sound chain of title to the goods, or a legitimate basis for the service received. |
| Payment | Payment is made through a traceable, commercially normal method rather than large cash settlements. |
The 12-month cycle described above applies to supplier verification. Supply verification carries no calendar of its own: it applies to every qualifying supply received from that supplier, each time, subject only to the AED 10,000 and AED 100,000 thresholds set out below.
The Three Thresholds That Scale the Obligation
The intensity of verification required is not flat - it rises with the value of the relationship with a given supplier. Three amounts drive this scaling, and each one governs a different layer of the check.
| Threshold | Governs | Effect |
|---|---|---|
| AED 10,000 | Supply verification, per transaction | A single supply valued below this amount, exclusive of VAT, is exempt from the detailed supply-verification checks. |
| AED 100,000 | Supplier's rolling 12-month total | Once supplies received from one supplier exceed, or are expected to exceed, this amount over a rolling 12 months, the AED 10,000 exemption stops applying to that supplier - every supply must then be verified, regardless of its own value. |
| AED 375,000 | Supplier verification, enhanced tier | Once a supplier's rolling 12-month total reaches this level - the same figure as the mandatory VAT registration threshold - supplier verification is upgraded: a written bank account confirmation letter from a UAE bank and a review of publicly available information and media coverage, in addition to the standing 12-month re-verification cycle. |
The three thresholds are calculated on the supplier's rolling 12-month total, not on any single invoice. They decide two separate things: whether an individual supply needs the detailed supply-verification checks (AED 10,000 and AED 100,000), and whether the supplier itself moves into the enhanced tier of supplier verification (AED 375,000). A business that deals with the same supplier repeatedly over a year will typically cross AED 100,000 in aggregate well before any single invoice looks large, which pulls the entire relationship back into full supply-level verification.
What Happens If a Business Does Not Verify a Supplier
Article 54 bis of the UAE VAT Law sets two standards of consequence. If the taxable person actually knew that a supply or supply chain was connected to tax evasion, the FTA must reject the related input tax recovery - there is no discretion. If the taxable person should have known, based on the circumstances of the supply, rejection is at the FTA's discretion, and this is precisely where the documented checks required by Decision No. 13 of 2026 become the evidence that decides the outcome.
A rejected input tax deduction increases the net VAT payable for the relevant tax period. Where the rejection is identified after the return has already been filed, the business is exposed to the standard consequences of an incorrect tax return, on top of losing the deduction itself. The commercial cost is therefore not only the VAT amount but the time spent reconstructing evidence retroactively - which is far harder than collecting it at the time of onboarding.
How This Works in Practice
Common Mistakes and Where Businesses Lose the Deduction
- Treating the tax invoice as sufficient. A correctly formatted tax invoice no longer settles the question of recovery on its own; the underlying supplier and supply checks are now a separate, additional condition.
- Verifying once and never again. Suppliers verified in 2024 or 2025 need a fresh check before 1 October 2026 and then at least every 12 months - an outdated file is treated as an unverified one.
- Missing the AED 100,000 aggregate. Businesses that apply the AED 10,000 de minimis invoice by invoice, without tracking the rolling 12-month total per supplier, frequently discover the exception no longer applied only after an audit.
- No named owner for the policy. Decision No. 13 of 2026 expects a documented internal policy identifying who performs, reviews and supervises the checks - an informal, undocumented practice does not meet this condition even if the checks themselves happen.
- Ignoring newly onboarded suppliers with disproportionate volumes. A new supplier invoicing amounts inconsistent with its declared business size or licensed activity is exactly the risk indicator the decision asks businesses to catch before, not after, the deduction is claimed.
Frequently Asked Questions
Q: Which businesses must verify their suppliers under the new VAT rules?
Any VAT-registered business in the UAE that claims input tax on a supply received is in scope, regardless of emirate, free zone or sector. The obligation applies supplier by supplier and does not exempt small or single-owner businesses.
Q: What is the AED 10,000 exception to supplier verification?
A single supply valued below AED 10,000, exclusive of VAT, is exempt from the detailed supply-verification checks. The exception does not apply once total supplies from that supplier exceed, or are expected to exceed, AED 100,000 over a rolling 12-month period.
Q: What triggers enhanced due diligence on a supplier?
Once annual supplies from a single supplier reach AED 375,000 - the same figure as the mandatory VAT registration threshold - a business must additionally obtain a written bank account confirmation letter from a UAE bank and review publicly available information and media coverage about that supplier.
Q: What happens if input tax is later linked to a supplier involved in tax evasion?
Under Article 54 bis of the UAE VAT Law, the FTA must reject the input tax recovery if the taxable person actually knew of the connection to tax evasion, and may reject it at its discretion if the taxable person should have known, based on the circumstances of the supply.
Q: How often must a business re-verify an existing supplier?
Supplier verification runs on a 12-month cycle: once on first dealing with a supplier, then at least once every 12 months for as long as the relationship continues. Supply verification is separate and has no calendar of its own - it applies to every qualifying supply received from that supplier, each time, unless the AED 10,000 exemption applies.
Q: Does Decision No. 13 of 2026 replace the requirement to hold a valid tax invoice?
No. A compliant tax invoice remains a separate, mandatory condition for input tax recovery under UAE VAT law. Decision No. 13 of 2026 adds an additional layer of supplier and supply verification on top of it.
How CoreLedger Supports Supplier Verification
CoreLedger sets up and runs the supplier verification file that Decision No. 13 of 2026 requires, so that an input tax position is backed by evidence before the VAT return is filed, not reconstructed afterward under FTA review.
- Drafting a written supplier-verification policy that names who checks, reviews and signs off on each supplier file.
- Collecting identity, trade licence and authorised-signatory evidence at onboarding, before the first invoice from a new supplier is booked.
- Tracking each supplier's rolling 12-month total against the AED 100,000 and AED 375,000 thresholds and flagging when a supplier moves into a higher tier of diligence.
- Obtaining the UAE bank account confirmation letter and reviewing public-record and media information once a supplier reaches AED 375,000 a year.
- Filing verification evidence alongside the tax invoice and payment proof, and scheduling the 12-month re-verification cycle so no supplier file lapses.
This work is built into CoreLedger's VAT compliance and accounting services, so supplier verification runs as part of the regular VAT return cycle rather than as a separate project bolted on before an audit.