Supplier Verification for Input VAT Recovery in the UAE: What FTA Decision No. 13 of 2026 Requires

From 1 October 2026, the right to recover input VAT in the UAE depends on whether a business has verified its suppliers. If a supplier turns out to be part of a VAT evasion scheme and no checks were carried out, the tax authority may deny the buyer’s input tax recovery. Below we explain what has to be checked, which documents to keep, and how cash payments are now treated.

What has changed, and what are the new rules based on?
Input VAT recovery is a business’s right to reduce the VAT it owes by the VAT it has paid to its suppliers. Until now, a valid tax invoice was generally sufficient to claim it.

The rules now rest on Article 54 bis of the UAE VAT Law, introduced by Federal Decree-Law No. 16 of 2025. The Federal Tax Authority (FTA) sets out how it applies in FTA Decision No. 13 of 2026. The logic is as follows:

• if a business knew that a transaction was linked to tax evasion, the FTA must deny recovery;
• if a business should have known, the FTA may deny recovery. Where no supplier check was carried out, the business is treated as one that should have known, and the FTA does not need to prove its awareness.

An invoice on its own is therefore no longer enough. A business has to be able to prove, with documents, that it knew who it was dealing with.

How should a supplier be verified?
A supplier is verified at the first transaction and again if more than 12 months have passed since the last check.

For a corporate supplier:

• confirm incorporation through official registers or a copy of the certificate of incorporation;
• obtain a copy of the authorised representative’s ID;
• confirm that the place of business actually exists and matches the supplier’s activity.

For an individual supplier:

• obtain a copy of their Emirates ID or passport;
• meet them in person or by video call before the supply.

Risk indicators also need attention: for example, a supplier that has changed its address or key staff more than twice in 12 months, or a transaction that is out of proportion to the supplier’s size and track record. Where such an indicator applies, the business must record a written justification for continuing to work with the supplier and provide it to the FTA on request.

What is required if a supplier’s volume exceeds AED 375,000?
If supplies from a single supplier exceed AED 375,000 (approx. USD 102,740) over the previous or the expected 12 months, the business must obtain written confirmation from a UAE bank that the supplier holds an account. The Decision also requires a review of publicly available information on the supplier’s business reputation.

What should be checked in each transaction?
Beyond the supplier itself, every supply is checked as well:

• the transaction has a genuine commercial rationale;
• the goods or services fall within the activities on the supplier’s licence;
• the price is in line with the market, and any significant deviation is justified;
• payment goes to the supplier’s own account. Payments to third parties or to accounts outside the supplier’s country of incorporation require an explanation;
• for goods, their origin and the supplier’s right to sell them are confirmed;
• where the supplier acts as an intermediary, there is a clear reason for its involvement.

Can suppliers be paid in cash?
Decision No. 13 of 2026 requires payments to be made by electronic means. Cash is acceptable only where the reason is documented.

In addition, amendments to the VAT Executive Regulation (Cabinet Decision No. 149 of 2026) have applied since 1 October 2026. Under them, input tax cannot be recovered on supplies paid in cash above a set threshold. The threshold is to be prescribed by the UAE Ministry of Finance in a separate decision and had not been announced at the time of publication. Rather than wait for it, it is advisable to move supplier payments to bank transfers now.

Which supplies do not need to be verified?
Supplies worth less than AED 10,000 (approx. USD 2,740), excluding VAT, do not have to be verified. This exemption does not apply if total supplies from the same supplier exceed AED 100,000 (approx. USD 27,400) over the previous or the expected 12 months.

What else to review: employee expenses
FTA Decision No. 17 of 2026 also took effect on 1 October 2026. It sets out which staff-related expenses allow input VAT recovery — for example, transport, food, accommodation, mobile and internet services, and parking. The key condition is that the business provides them to employees free of charge under an employment contract or an approved internal policy. If you already recover VAT on such expenses, it is worth checking that the conditions of the Decision are met.

What a business should do now: a checklist

1. Compile a register of all suppliers and contractors.
2. Collect each one’s licence, bank details and representative’s details.
3. Check services against the supplier’s licence and prices against the market.
4. For suppliers with an annual volume of AED 375,000 or more, obtain a letter from a UAE bank confirming the account.
5. Pay only into the supplier’s own account.
6. Move cash payments to bank transfers.
7. Review input VAT claims on employee expenses.
8. Approve an internal verification policy and appoint those responsible.
9. Keep evidence of every check and repeat it every 12 months.

The internal policy is mandatory. The Decision requires a written record of who carries out the checks, who reviews and supervises them, and what powers those people have.

Frequently asked questions

Will input VAT be denied automatically if a supplier broke the law?
No. Denial is mandatory where the business knew of the evasion. Where it should have known, the FTA may deny recovery. A documented supplier check is the main way to show that the business acted in good faith.

When do the new requirements apply?
From 1 October 2026. Checks apply to supplies from that date, and suppliers you continue to work with should be verified at the next transaction.

Do we need to verify suppliers we have worked with for years?
Yes. The requirement covers all suppliers, and each check must be renewed every 12 months.

Which documents should we keep?
Copies of licences and certificates of incorporation, representatives’ IDs, bank confirmations, justifications for prices and payment methods, and the internal verification policy itself. The FTA may request them to confirm that the checks were actually carried out.

Conclusion
Input VAT recovery in the UAE now depends not only on the invoice but on how thoroughly a business has verified the supplier and the transaction itself. A structured verification procedure, bank payments and well-kept records protect the right to recover VAT and reduce tax risk.

Official sources

• FTA Decision No. 13 of 2026
• FTA Decision No. 17 of 2026

Need help moving to bank payments? Wesupport provides corporate bank account opening services in the UAE and can arrange a consultation with a tax specialist.

Get in touch, and our manager will advise you on the next steps.

This article is for information purposes only and does not constitute tax advice. The information is current as of 30 October 2026. Tax legislation changes, so please check official sources or consult a specialist before making decisions.