Key Takeaways
- A valid tax invoice is no longer the whole story. From 1 October 2026, VAT-registered businesses must also be able to show they checked the supplier and the purchase before deducting input tax.
- Three numbers decide how much work applies to each supplier: AED 10,000, AED 100,000 and AED 375,000.
- Every business that claims input VAT needs a written verification policy in place from day one.
- Cash payments to suppliers deserve special attention, as a separate cash limit for input tax recovery is on the way.
What Is FTA Decision No.13
The UAE Federal Tax Authority (FTA) has issued Decision No. 13 of 2026, which provides for the measures, procedures and conditions to be followed by Taxable Persons for the purpose of verifying the validity and integrity of supplies prior to the deduction of Input Tax. The Decision takes effect from 1 October 2026, and from that date these verification procedures apply in addition to the existing conditions for input tax recovery.
The Decision gives practical effect to Article 54 (bis) of the VAT Law. That article was added by Federal Decree-Law No. 16 of 2025 and allows the FTA to refuse input VAT recovery where a supply is part of a chain connected to tax evasion, even if the business claiming the input tax was not directly involved in the evasion.
In simple terms, Decision 13 tells businesses what “reasonable care” looks like. If you run the prescribed checks and keep evidence, you are in a much stronger position if a problem is later found further up the supply chain.
Does It Apply to Your Business?
If your business is VAT-registered and recovers input tax, the answer is almost certainly yes. The Decision applies to every taxable person under the VAT Law, meaning any business that is registered, or required to be registered, for VAT in the UAE. Imports and reverse-charge supplies are also covered, because the Decision’s definition of input tax expressly includes tax due on imports.
This is not only an issue for large corporates. Small and medium-sized businesses with a handful of regular suppliers are covered too, and the written policy requirement applies regardless of size.
What Actually Happens If You Don’t Carry Out the Checks?
It is worth being precise here, because much of the commentary overstates the risk.
Article 54 (bis) works in two stages. Where the FTA establishes that a supply was connected to tax evasion and the business knew of that connection, the FTA must reject the input tax. Where the business should have known, the FTA may reject it. Decision 13 feeds into the second stage: a business that did not verify its supplies as required is treated as having been required to be aware of the connection.
What this means in practice:
- If there is no tax evasion anywhere in the supply chain, an incomplete supplier file does not by itself cost you your input VAT.
- If evasion is discovered and you did not carry out the checks, you lose the argument that you had no way of knowing, and the FTA may deny your input tax.
The real exposure is therefore the denied deduction and the knock-on effect of an understated VAT return, not a standalone fine. The Decision itself does not contain a penalty of its own. The practical lesson is simple: the checks are your evidence, and evidence only helps if it exists before the problem arises.
The Three Thresholds That Decide Your Workload
The amount of verification required depends on the value of each purchase and your total spend with each supplier.
Below AED 10,000 per supply. A supply valued at less than AED 10,000, excluding VAT, can be disregarded under the Decision entirely. Note that an invoice of exactly AED 10,000 does not qualify, and the test uses the value before VAT, not the invoice total.
Above AED 100,000 per supplier. If your total purchases from one supplier exceed AED 100,000 over the past 12 months, or are expected to exceed it over the next 12 months, the AED 10,000 exception no longer applies to that supplier.
Above AED 375,000 per supplier. When spend with one supplier exceeds AED 375,000 on the same rolling test, two additional checks apply: a UAE bank confirmation and a documented review of the supplier’s public reputation.
A quick example: your business buys stationery and printing from a local supplier. A single invoice is AED 6,500, which looks exempt. But your total spend with that supplier over the last year is AED 140,000. Because you have crossed AED 100,000, the small-supply exception is switched off, and that AED 6,500 invoice now needs the full supplier and transaction checks.
This is why the starting point for every business is a 12-month purchase report grouped by supplier, not a review of individual invoices.
Checks on the Supplier
Supplier checks are carried out once and then refreshed periodically. Verification is required when you deal with a supplier for the first time, or where the supplier has not been verified during the preceding 12 months.
Identity. For an individual supplier, you need a copy of their Emirates ID or passport and must meet them, in person or virtually, before the supply. For a company, you must verify its incorporation through official records and obtain identification for its authorised representative.
Place of business. Confirm, electronically or by visiting, that the supplier has a genuine place of business that is consistent with its activities.
Warning signs. The Decision lists specific red flags. These are an address changed more than twice in the previous 12 months, key employees changed more than twice in the same period, and transactions that are unusual in volume, value, or nature compared with the supplier’s size and history. A red flag does not mean you must stop trading with the supplier. It means you must obtain and document a reasonable explanation.
Additional checks above AED 375,000. You need written confirmation from an authorised UAE bank that the supplier holds a bank account without any reservations, plus a documented review of reviews and media coverage from reliable sources. Bank letters take time, so request them early.
Checks on Each Purchase
While supplier checks are periodic, transaction checks apply to every purchase except those under AED 10,000. Before claiming input VAT, you should be satisfied that:
- there is a genuine commercial reason for the purchase;
- the price and margin are justifiable against the market;
- the goods or services fall within the supplier’s licensed activity;
- any intermediary in the transaction has a reasonable commercial role; and
- for goods, their authenticity and origin, and the supplier’s right to sell them, have been considered.
The easiest way to manage this is to build these questions into your existing purchase approval process, so they are answered at the point an invoice is approved rather than months later when the VAT return is prepared.
Cash Payments: A Growing Risk
The Decision requires supplier payments to be made by electronic means. Cash is not prohibited, but a cash payment must be supported by a documented commercial reason and be easy to verify.
There is a further change coming on the same date. Cabinet Decision No. 149 of 2026 amends the VAT Executive Regulation from 1 October 2026 so that input tax cannot be recovered on supplies above an amount to be set by the Minister of Finance, where payment is made or intended to be made in cash. As of late September 2026, the Minister’s decision setting that amount had not been published.
Businesses that regularly pay suppliers in cash should start moving those payments to bank transfer now.
The Document You Must Have in Place
Businesses must maintain a documented policy identifying the persons responsible for implementing, reviewing and supervising the verification procedures, together with their powers and responsibilities. Businesses must also document the verification procedures performed and retain supporting records.
For most SMEs, this policy can be short and practical. What matters is that it reflects how your business actually buys and pays, and that it names real people.
Your Action Checklist
- Run a 12-month supplier spend report and sort suppliers into three groups: above AED 375,000, above AED 100,000, and the rest.
- Build supplier files for the two higher groups, starting with identity, incorporation,n and place of business.
- Request bank confirmations for suppliers above AED 375,000 and document the public reputation review.
- Write and approve your verification policy, naming who performs, reviews, and supervises the checks.
- Add the transaction checks to your purchase approval workflow.
- Review cash-paid suppliers and convert to electronic payment where possible.
- Brief your accounts and procurement staff so the checks become routine.
How Vision Taxation Can Help
At Vision Taxation, we help businesses in Dubai and across the UAE turn new FTA requirements into simple, workable procedures. For Decision No. 13 of 2026, our support includes:
- analysing your 12-month supplier spend against the three thresholds;
- preparing a verification policy tailored to your business;
- designing supplier onboarding forms and verification checklists;
- reviewing input tax exposure on high-risk or cash-paid suppliers; and
- VAT registration and VAT return preparation and submission.
Contact Vision Taxation today to review your supplier files and prepare your business for the new input VAT verification rules.
Frequently Asked Questions
When does FTA Decision No. 13 of 2026 take effect?
It takes effect from 1 October 2026.
Is a valid tax invoice still enough to claim input VAT?
A valid tax invoice is still required, but it is no longer the only protection. Businesses will need to show that they checked who they were buying from, understood the transaction, and kept evidence of those checks.
Will my input VAT be rejected automatically if I miss a check?
No. Rejection under Article 54 (bis) requires the supply to be connected to tax evasion. Missing the checks removes your defence that you could not have known, which allows the FTA to reject the deduction in that case.
Do small purchases need to be verified?
Purchases below AED 10,000, excluding VAT, are generally exempt, unless your total spend with that supplier exceeds AED 100,000 over 12 months.
Does the Decision cover overseas suppliers?
Imports are in scope, yes. Confirmation of bank details requires a UAE bank, which a non-resident supplier may not have, and no alternative is provided for in the Decision. This is an area to look for more FTA guidance.
