UAE VAT Supplier Verification: FTA Decision 13 of 2026

Phoenix AdvisoryPublished 7 September 20265 min read

From 1 October 2026, FTA Decision No. 13 of 2026 sets out how taxable persons must verify suppliers and supplies before deducting input VAT. The useful response is a documented purchasing and VAT review process. Start with the actual thresholds, then find the gaps in your supplier files.

Why supplier verification affects input VAT recovery

A valid tax invoice answers one question. Whether the underlying supply is credible is another. FTA clarification VATP046 explains Article 54(bis): recovery is rejected where the FTA establishes a tax-evasion connection known to the taxpayer, and may be rejected where the taxpayer should have known. Failure to perform the prescribed verification engages that latter test. The relevant chain can extend beyond the immediate supplier.

That is a serious reason to improve controls. It does not support a blanket claim that every missing document automatically cancels all input VAT. Equally, passing a TRN check does not establish that every transaction with that supplier is sound. The question for finance is whether the file supports both the counterparty and the particular purchase.

What do you need to check about the supplier?

Article 3 distinguishes individuals from legal entities. For an individual, obtain valid identity evidence and meet physically or virtually before the supply. For a legal entity, verify incorporation through an official database or matching incorporation documentation, and obtain identity evidence for its authorised director, agent or employee. Verify the actual business location and whether it fits the activity, using suitable electronic means or a visit.

The decision identifies risk indicators: more than two changes of business address within twelve months, more than two changes of key employees within twelve months, and transactions whose nature, volume or value do not fit the supplier’s business and history. Where indicators arise, obtain and retain a clear, justified explanation consistent with the other evidence. A change of address is a prompt to investigate in context, not a reason to invent a blacklist.

The AED 10,000, AED 100,000 and AED 375,000 tests

For the additional bank check, obtain from the supplier written confirmation issued by an authorised bank in the UAE about its bank account, without relevant reservations or conditions. The confirmation need not be addressed to you. Article 3 also calls for reliable public reviews or media checks for consistency of business activity and tax-evasion warning signs. A bank-detail field on an invoice is not the same document.

What must be checked on each supply?

Article 4 covers commercial rationale, the supplier’s role, commercially supportable prices and margins, activity compatibility, and—for goods—authenticity, origin and the supplier’s ownership or right to dispose. Intermediaries need a commercial explanation. Payments to a third party or an account outside the supplier’s country of incorporation need justification.

Electronic payment is the stated method. Cash requires a documented commercial reason, observance of applicable tax-legislation thresholds and an easily verifiable transaction. The decision does not give a single new universal cash limit. Do not treat cash as automatically banned, or a receipt as the whole verification exercise.

A supplier-verification checklist for your finance team

Article 5 requires first-time supplier verification, repeat verification where none was performed in the preceding twelve months, checks on each taxable supply, documented evidence and a written policy assigning responsibilities. The policy must be retained at the designated recordkeeping location. The following is our suggested way to organise that work; it is not an FTA-issued checklist.

1. Build the register. Match supplier names, legal identities and payment details. Add prior twelve-month spend, expected spend, last verification date and a link to supporting evidence.
2. Separate onboarding from invoice review. Purchasing can gather supplier documents; finance can check transaction rationale, payment exceptions and the VAT claim. Assign an owner for unresolved gaps.
3. Test a small cross-section. Walk through a new supplier, a recurring supplier, a foreign payment, a low-value purchase and a higher-spend account. Record where the existing process fails.
4. Make exceptions reviewable. Keep the reason, evidence, decision-maker and review date together. Do not leave an unexplained payment change in an individual employee’s inbox.
5. Prepare before October. Request missing documents, agree responsibilities and brief the people raising purchase orders. Keep the policy usable during an ordinary payment run.

The new recordkeeping decision matters here too: evidence that nobody can retrieve is of little practical use. Our VAT compliance service can help review the handoff between procurement, accounts payable and the VAT return.

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