Dubai, UAE: UAE businesses are facing a new Input VAT compliance requirement as the Federal Tax Authority (FTA) prepares to implement Decision No. 13 of 2026. Issued on 22 July 2026 and published in August, the decision will take effect from 1 October 2026 and introduces specific verification measures that taxable persons must complete before deducting Input Tax.
The new framework is linked to Article 54(bis) of the UAE VAT Law and focuses on verifying the validity and integrity of supplies. This means businesses will need to look beyond basic supplier documents and keep evidence showing that required checks were carried out.
What Is Changing From 1 October?
Under the new requirements, businesses must verify suppliers when dealing with them for the first time. The verification must also be repeated when a supplier has not been verified during the previous 12 months.
For individuals, businesses must obtain valid identification and hold an in-person or virtual meeting before the supply. For companies, checks include verifying incorporation details, the identity of an authorised representative and the existence of an actual place of business.
Businesses must also assess supplier risk. Frequent changes to a supplier’s address or key employees, as well as transactions that appear unexpected or disproportionate to the supplier’s size and history, are among the indicators that require attention.
For suppliers where transactions exceed, or are expected to exceed, AED 375,000 over a 12-month period, additional checks apply. These include obtaining evidence of a UAE bank account and reviewing relevant public information and business reputation.
The Supply Itself Must Also Be Checked
The new rules are not limited to supplier identity. Before deducting Input Tax, businesses must also verify the underlying supply.
This includes checking the commercial reason for the transaction, payment arrangements, whether the price is reasonable compared with market rates, and whether the goods or services fit the supplier’s licensed and normal business activities.
Businesses must also consider the ownership and origin of goods. Where an intermediary is involved, its role should have a clear commercial explanation. Cash payments and certain third-party or overseas payment arrangements may also require justification.
What About Small Purchases?
Supplies below AED 10,000 excluding VAT may qualify for the verification exception, subject to the conditions in the decision. However, the exception does not apply where total supplies from one supplier exceed, or are expected to exceed, AED 100,000 over the relevant 12-month period.
What Happens If Businesses Ignore the Requirements?
The consequences can affect a business’s Input Tax deduction entitlement under Article 54(bis). Businesses must document the verification steps they take and retain supporting records.
The decision also requires a documented internal policy identifying who is responsible for implementing, reviewing and supervising the verification procedures, including their powers and responsibilities.
What Should UAE Businesses Do Now?
With the 1 October 2026 effective date approaching, businesses should review their supplier onboarding, procurement and accounts payable processes. They should identify higher-value suppliers, assess existing verification controls, assign internal responsibilities and prepare the required documentation and policy.
For businesses dealing with UAE VAT on a regular basis, this is an important compliance update to address before the new requirements take effect.
Dubai Business and Tax Advisors (DBTA) can help businesses understand the new verification framework and review their existing VAT, supplier and financial controls. With experience across UAE accounting and tax compliance matters, DBTA can help businesses approach the new requirements in a structured and practical way.
