FTA Decision No. 13 of 2026: Verify Your Suppliers or Risk Losing Input Tax Recovery

From 1 October 2026, claiming input VAT in the UAE will require more than a valid tax invoice. Under FTA Decision No. 13 of 2026, issued on 22 July 2026, VAT-registered businesses must verify the validity and integrity of their suppliers and the supplies they receive before deducting input tax. Skip these checks, and the Federal Tax Authority can treat you as having known about tax evasion in your supply chain, and deny your input tax recovery on those transactions.

This is one of the most operationally significant VAT changes since the tax was introduced in 2018. It moves supplier due diligence from good practice to a legal condition for recovering VAT.

Here is what the Decision requires, who it applies to, which transactions are exempt, and what your business should do before October.

The short answer

FTA Decision No. 13 of 2026 requires every Taxable Person in the UAE to:

1. Verify each supplier (identity, place of business, risk profile, and for larger suppliers, banking status) before dealing with them, and re-verify at least every 12 months.
2. Verify each taxable supply received (commercial rationale, payment conditions, pricing, and the supplier's right to sell the goods).
3. Document everything and maintain a written internal policy naming who is responsible for these checks.

Supplies under AED 10,000 (excluding VAT) are generally exempt from the measures, unless total supplies from that supplier exceed AED 100,000 over 12 months. The Decision takes effect on 1 October 2026.

Why this Decision exists: Article 54(bis)

The Decision does not appear out of nowhere. It implements Article 54(bis) of the UAE VAT Law, a new provision inserted by Federal Decree-Law No. 16 of 2025, which amended Federal Decree-Law No. 8 of 2017 with effect from 1 January 2026.

Article 54(bis) gives the FTA the power to deny input tax recovery where a supply forms part of a supply chain connected to tax evasion, and the Taxable Person knew, or should have known, of that connection.

The critical mechanism is this: a business that fails to carry out the verification measures specified by the FTA can be deemed to have known about evasion in the chain. FTA Decision No. 13 of 2026 is that specification. It tells you exactly which measures, procedures and conditions the FTA expects.

In practical terms, the Decision is your protection. A business that performs and documents these checks has strong evidence that it exercised reasonable care. A business that ignores them has handed the FTA a ready-made basis to deny its input tax if any supplier in the chain turns out to be involved in evasion.

The Decision defines Tax Evasion as the use of illegal means resulting in a reduction of due tax, non-payment of tax, or a tax refund the person was not entitled to receive.

Who must comply

The Decision applies to Taxable Persons: any person registered, or obligated to register, for VAT in the UAE. If your business claims input VAT on its purchases, this Decision applies to you. Stevva supports businesses across this obligation through VAT compliance services in the UAE.

It applies across all sectors. There is no carve-out for size, industry, free zone status or length of trading history. The only relief is the transaction value exception covered later in this article.

Part one: verifying the supplier (Article 3)

Article 3 of the Decision sets out four verification areas for each supplier.

1. Identity of the supplier

The requirements differ depending on whether your supplier is an individual or a company.

Note the meeting requirement for individuals. A purely paper-based onboarding is not enough where the supplier is a natural person; a call or video meeting before the supply satisfies the "virtual" option.

2. Address and place of business

You must:

• Verify that the supplier has an actual place of business, either using appropriate electronic means or through a field visit.
• Ensure the place of business is compatible with the nature of the supplier's activities. A supplier invoicing you for heavy machinery from a residential flat with no storage, logistics or staff should prompt questions.

3. Risk indicators

If any indicator does apply, the transaction is not automatically blocked. Instead, you must retain a clear and justified explanation for why the indicator exists, and provide it to the FTA on request. The explanation must not contradict the evidence and information available to you. In other words, you can still deal with a fast-growing supplier that recently relocated twice, but you need to document why that pattern is commercially legitimate.

4. Bank account and reputation checks (AED 375,000 threshold)

Where the value of supplies received from a supplier exceeds AED 375,000 over the previous 12 months, or is expected to exceed that amount over the next 12 months, two additional checks apply:

• Bank confirmation. Obtain a written confirmation from a bank authorised in the UAE confirming that the supplier holds a bank account. The confirmation must not contain relevant reservations or conditions. It does not need to be addressed to you specifically, so a standard bank letter held by the supplier can be acceptable.
• Public reputation review. Review publicly available reviews and media coverage of the supplier from reliable sources, checking that they are consistent with the nature and size of the supplier's business, and that there are no indicators of suspected tax evasion.

It is not a coincidence that AED 375,000 mirrors the mandatory UAE VAT registration threshold. Suppliers above this level of business with you attract enhanced scrutiny.

Part two: verifying each supply (Article 4)

Supplier verification is only half the framework. Article 4 requires checks on the supplies themselves, grouped into three areas.

1. General assessment

Conduct a general assessment of the conditions of the transaction and satisfy yourself that the supplier's participation is based on genuine commercial reasons. If a transaction only makes sense as a paper exercise, that is a problem.

2. Payment conditions

• The payment method and terms must be justifiable for commercial reasons.
• Where a third party is involved in making or receiving payment, or where payment goes to a bank account outside the supplier's country of incorporation, there must be a reasonable commercial explanation that does not contradict the information available to you.
• Payment should be made by electronic means. Cash payments are permitted only where there is a documented commercial reason, the payment stays within thresholds in applicable tax legislation, and it is easily verifiable.

For most businesses, the message is simple: pay suppliers electronically, into the supplier's own account, in the supplier's own country of incorporation, unless you have a documented reason to do otherwise.

3. Circumstances of the supply

• Pricing. Verify that prices or profit margins are not commercially unjustifiable or significantly out of line with market conditions without a clear reason. Prices well below market can indicate a chain where VAT is being evaded somewhere upstream.
• Licensed activity. Verify that the goods or services fall within the supplier's ordinary activity and the activities on its commercial licence. A general trading question is straightforward; a firm licensed for IT consultancy selling you bulk gold is not.
• Authenticity and ownership. Verify the authenticity and origin of goods received, and that the supplier owns them or has the right to dispose of them.
• Intermediaries. Where the supplier acts as an intermediary, there must be a clear and justifiable commercial explanation for its role in the supply.

How often, and what to document (Article 5)

Article 5 turns the checks into an ongoing compliance cycle. A Taxable Person must:

1. Verify each supplier

   On first dealing, and again in any recurring relationship where the supplier has not been verified in the previous 12 months.

2. Verify each supply

   Each taxable supply received or accepted, in line with Article 4.

3. Document and retain

   Record the verification steps and keep the supporting documents, so the FTA can confirm the checks were properly carried out.

4. Maintain a written policy

   Name who is responsible for implementing, reviewing and supervising the procedures, stored with your tax records.

Repeat: supplier checks refresh every 12 months

In practice, point 1 means an annual re-verification cycle for your active supplier base. Point 4 deserves attention because it is easy to overlook. Having done the checks is not enough; the FTA expects a written policy that names the responsible people, with their powers and responsibilities clearly stated, kept at the location designated for retaining required tax records. For many SMEs, this will be the first formal compliance policy they have ever had to write. Solid accounting and bookkeeping services make the documentation side considerably easier.

The exceptions: AED 10,000 and the AED 100,000 override (Article 6)

The Decision includes a de minimis rule, but it comes with an important override that is widely misunderstood. The three thresholds work together like this:

The practical effect: you cannot avoid verification by splitting purchases into small invoices. A supplier you buy from regularly will usually cross the AED 100,000 annual mark, and at that point every supply from them, including small ones, falls back within the verification requirements.

What happens if you do not comply

The consequence is built into Article 54(bis) itself. If a supply in your chain is connected to tax evasion and you did not carry out the FTA-specified verification, you can be treated as having known about the evasion. The result: the FTA can deny your input tax recovery on the affected transactions.

For a business with, say, AED 2 million of annual input VAT claims, even a partial denial tied to one problematic supplier relationship is a direct cash cost, before considering the administrative penalties, interest exposure and audit attention that typically follow.

The reverse is also true. Documented compliance with Decision No. 13 of 2026 is your strongest evidence of good faith if a supplier ever turns out to be part of an evasion scheme you had no knowledge of.

How to prepare before 1 October 2026

The window between issuance (22 July 2026) and effect (1 October 2026) is short. A practical preparation plan:

1. Map your supplier base. Classify suppliers by 12-month spend: under AED 10,000 per supply and under AED 100,000 annually (exempt), between the thresholds, and above AED 375,000 (enhanced checks).
2. Build a supplier verification file template. Identity documents, licence and incorporation checks, place of business evidence, risk indicator review, and for larger suppliers, bank confirmation and reputation review.
3. Update supplier onboarding. Make verification a gate before the first purchase order, not an afterthought at year end.
4. Set a 12-month re-verification calendar. Existing suppliers need a refresh cycle, not a one-off exercise.
5. Review payment practices. Move remaining cash payments to electronic channels wherever possible, and document commercial reasons for any exceptions, third-party payment arrangements or offshore accounts.
6. Write the internal policy. Name the people responsible for performing, reviewing and supervising verification, and store the policy with your tax records.
7. Train procurement and finance teams. The people raising purchase orders and approving payments are your first line of defence, not just the tax team. The same discipline pays off across UAE Corporate Tax compliance too.

Key takeaway

From 1 October 2026, input VAT recovery in the UAE depends on demonstrable supplier and supply verification, not just a valid tax invoice. The framework in FTA Decision No. 13 of 2026 is detailed but workable: verify who you buy from, verify what you buy, apply the AED 10,000 / AED 100,000 / AED 375,000 thresholds correctly, repeat the supplier checks every 12 months, and document all of it under a written policy. Businesses that build this into procurement now will protect their input tax; businesses that wait for their first FTA audit will be arguing from a weak position.

Frequently asked questions

Need help getting ready for October 2026?

Building a supplier verification framework, threshold tracking and a documented internal policy takes planning, and the deadline is close. Stevva's VAT team helps UAE businesses design and implement practical verification procedures that satisfy FTA Decision No. 13 of 2026 without slowing down procurement, as part of our tax consultancy in the UAE.

Speak to Stevva about a readiness review for your business.