Supplier Verification for Input VAT: FTA Decision 13

Supplier verification under FTA Decision No. 13 of 2026 | Issued 22 July 2026 | In force since 1 October 2026

The UAE Federal Tax Authority (FTA) has set out the supplier verification checks a business should make before it deducts input VAT. These checks sit in FTA Decision No. 13 of 2026. The FTA explains how they work in VAT Public Clarification VATP048.

The Decision matters because of one risk. If a supply turns out to be linked to tax evasion, the FTA can refuse your input VAT deduction. Your VAT recovery position then depends on what you can prove. This guide explains the rules, the thresholds and the steps your finance and procurement teams should take.

1. Why the Decision Matters for Input VAT Recovery

A taxable person can normally recover the input VAT on purchases used to make taxable supplies. The usual conditions still apply. Our guide to VAT refunds for businesses in the UAE covers them.

However, Article 54(bis)(2) of the VAT Law allows the FTA to reject the deduction in one case. The supply must be part of a supply or a chain of supplies linked to tax evasion. Also, the taxable person should have been aware of that link, based on the circumstances of the supply.

FTA Decision No. 13 of 2026 sets the measures, procedures and conditions that show you took reasonable care. In short, it tells you how to prove that you were not aware, and could not be expected to be aware, of the evasion.

What the FTA clarified in VATP048

Scope: the Decision applies only where the FTA establishes that tax evasion actually occurred.
Not mandatory for every purchase: you are not required to apply the measures to all supplies. Still, building them into normal procurement gives you documentary evidence to rely on.
Your protection: if you were not actually aware of the evasion and you complied with the Decision, you will not be treated as someone who “should have been aware”. The normal VAT rules on input tax recovery then apply.
Risk if you skip the checks: without evidence, you may struggle to show that you were unaware of the evasion.

The burden of proof also matters. Under Article 51 of the Tax Procedures Law, the FTA carries the burden of proving tax evasion. Your evidence answers the second question: whether you should have known.

2. Supplier Verification Requirements (Article 3)

You must verify a supplier when you deal with it for the first time. You must also verify a returning supplier that has not been verified in the previous 12 months.

Supplier verification: identity

Individual supplier: obtain a copy of a valid Emirates ID or passport. Also meet the supplier, in person or virtually (for example by video call), before the supply is made.
Company supplier: verify its incorporation through official databases, or obtain its certificate of incorporation. The details must be valid and match the entity’s name, address and employees.
Authorised representative: obtain a valid Emirates ID or passport for the director, agent or employee who represents the company.

Supplier verification: address and place of business

Confirm that the supplier has an actual place of business. You can use online maps and navigation platforms, or visit the premises.
Check that the premises fit the nature of the supplier’s activities.

Supplier verification: risk indicators

Check that none of these three indicators applies:

The supplier changed its address more than twice in the past 12 months.
The supplier changed its key employees, such as managers or your contacts, more than twice in the past 12 months.
The supplier carried out transactions that are disproportionate or unexpected in volume, value or nature. The test compares them with the size and trading history of its business.

If an indicator applies, keep a clear and justified explanation and give it to the FTA on request. The explanation must not contradict the evidence you hold.

Extra checks for suppliers above AED 375,000

Two further checks apply when supplies from the same supplier exceed, or are expected to exceed, AED 375,000 in a 12-month period:

Bank account: obtain written confirmation from a bank authorised in the UAE that the supplier holds an account. An IBAN letter is one example. The confirmation must not carry relevant reservations or conditions. It need not be addressed to you.
Reputation: review reliable, publicly available reviews and media coverage. They must fit the nature and size of the supplier’s business and show no signs of suspected tax evasion.

3. Supplier Verification: Checks on Each Supply (Article 4)

Verifying the supplier is only half of the task. You must also assess each taxable supply you receive or accept.

General assessment

Assess the conditions of the transaction. Make sure the supplier’s role rests on genuine commercial reasons.

Payment conditions

The payment method and terms must make commercial sense.
If a third party takes part in the payment, or the money goes to a bank account outside the supplier’s country of incorporation, keep a reasonable commercial explanation on file.
Pay by electronic means. A cash payment needs a documented commercial reason. It must also stay within the limits set by tax legislation and be easy to verify. VATP048 notes that the Minister of Finance will set the cash thresholds by a separate Decision.

Circumstances of the supply

Pricing: prices and profit margins should not be commercially unjustifiable or far from market conditions without a clear reason.
Licensed activity: the goods or services must fall within the supplier’s ordinary activity and the activities on its commercial licence.
Goods: verify their authenticity and origin, and the supplier’s ownership or right to dispose of them.
Intermediaries: where the supplier acts as an intermediary, there must be a clear and justifiable explanation for its role.

Examples from the FTA

VATP048 gives practical examples. Three of them show how the rules work.

Untested supplier: a boutique hired a curtain specialist found through social media. It dealt only by WhatsApp and never checked who the specialist was. If the supply were linked to evasion, the boutique would be treated as having “should have been aware”.
Price too good to be true: a hotel accepted AED 200 per bed-sheet set from a new wholesaler when the market range was AED 400 to 800. The hotel did not ask why. It failed the pricing check.
Licence mismatch: a restaurant asked a new wholesaler for its trade licence. The licence covered management and IT consulting, not shisha supply. The restaurant walked away, so the check worked as intended.

4. Supplier Verification Documentation and Internal Controls (Article 5)

The Decision requires you to do more than carry out the checks. You must also be able to prove them. For each supplier and each supply, you should:

Document the verification steps and keep the supporting records, so the FTA can test them.
Keep supplier identification and incorporation documents.
Keep evidence of the address, place of business and licensed activity checks.
Record the payment and transaction assessments, and the explanations for any risk indicator.
Keep documents on the origin and authenticity of goods, where relevant.
Maintain a documented policy. It should name the people who implement, review and supervise the procedures, and set out their powers and responsibilities. Store it where your records are kept.

5. Exception for Supplies Below AED 10,000

A taxable person may skip the measures for a supply where the consideration, excluding VAT, is below AED 10,000.

However, the exception does not apply when total supplies from the same supplier exceed, or are expected to exceed, AED 100,000 in 12 months. Therefore, monitor cumulative spend by supplier. Do not judge invoices one at a time.

Threshold	What it triggers
Below AED 10,000 per supply (excl. VAT)	Verification may be skipped, unless the AED 100,000 limit is reached
Above AED 100,000 from one supplier in 12 months	The AED 10,000 exception no longer applies
Above AED 375,000 from one supplier in 12 months	Bank account confirmation and review of reputation are also required

6. Recommended Supplier Verification Actions for UAE Businesses

Review and update your supplier records, starting with your largest suppliers.
Introduce a supplier verification procedure as part of supplier onboarding and due diligence.
Track spend by supplier against the AED 10,000, AED 100,000 and AED 375,000 thresholds.
Tighten procurement and payment approval controls, especially for third-party and overseas payments.
Use a verification checklist for each taxable supply.
Approve a written supplier verification policy with named owners.
Train finance, procurement and accounting staff.
Re-verify active suppliers at least every 12 months.

These steps also help with related compliance work, such as VAT return filing in 2026 and the move to e-invoicing. Strong supplier verification records make both easier.

How Parker Russell UAE Can Help

Parker Russell UAE provides VAT advisory, compliance and tax risk management services to businesses across the UAE. We can help you with:

VAT compliance and input tax risk assessments through our tax review and audit service.
Supplier due diligence procedures and verification checklists.
Drafting a supplier verification policy that meets Article 5 of the Decision.
Reviews of input VAT recovery risk, including forensic accounting support where a supplier raises concerns.
Support with tax disputes and reconsiderations if the FTA challenges a deduction.
Training for finance and procurement teams.

To discuss your VAT controls, contact our Dubai office on +971 4 295 9958 or at infodubai@pr-uae.com. You can also reach our Abu Dhabi office on +971 2 645 2666.

Frequently Asked Questions

Does FTA Decision No. 13 of 2026 apply to every purchase?

No. According to VATP048, the Decision applies only where the FTA establishes that tax evasion occurred. You are not required to apply the measures to every supply. Even so, applying them as normal practice gives you evidence if the FTA ever questions a deduction.

When did the Decision take effect?

The Decision was issued on 22 July 2026. It has been in force since 1 October 2026.

How often is supplier verification required?

Verify a supplier at first dealing. After that, verify it again when it has not been verified in the previous 12 months.

What happens if I did my checks and evasion is found later?

If you complied with the Decision, kept the evidence and were not party to the evasion, the FTA accepts that you were unaware. The normal VAT rules on input tax recovery then apply (VATP048, Example 8).

This article is for general information only and is based on the unofficial English translation of FTA Decision No. 13 of 2026 and on VAT Public Clarification VATP048. It is not tax advice. Please read the official texts at tax.gov.ae and speak to an adviser about your own facts.

Input VAT and Supplier Verification: FTA Decision No. 13 of 2026