From 1 October 2026, UAE businesses must follow new procedures to check their suppliers and purchases before claiming input VAT. These rules are set out in Federal Tax Authority (FTA) Decision No. 13 of 2026 and require businesses to do more than collect tax invoices. They must check supplier details, understand the nature of the purchases and keep records demonstrating that the necessary checks have been completed.

These changes affect everyday business activities, including purchasing goods, hiring service providers, processing invoices and preparing VAT returns. Businesses should review their current procedures to make sure they meet the new requirements. Understanding these rules can help businesses identify problems early and maintain proper VAT records.

This guide explains the UAE VAT input tax verification requirements in simple terms, including supplier checks, transaction reviews, important financial thresholds and practical steps businesses can take to improve VAT compliance.

What Are the UAE VAT Input Tax Verification Requirements?

Input VAT is the value added tax a business pays when it purchases goods or services for its business activities. A VAT-registered business may be able to recover this amount through its VAT return if it meets the applicable legal conditions. Under FTA Decision No. 13 of 2026, businesses must also complete the relevant supplier and transaction checks before claiming input VAT.

In simple terms, businesses must check who they are buying from and whether the purchase is genuine and makes commercial sense. They should also review unusual prices, payment arrangements and other irregularities in supplier details, such as frequent address or representative personnel changes. Keeping a valid tax invoice is important, but it does not replace the other checks required under the applicable rules.

The verification requirements cover several areas:

  • Verifying the supplier's identity and business registration.
  • Confirming that the supplier has a genuine place of business.
  • Screening for risk indicators such as frequent changes in supplier’s details, that may indicate higher supplier risk.
  • Checking the genuine commercial purpose and market-consistent price of each purchase.
  • Verifying goods and their ownership where applicable.
  • Documenting each check and maintaining a written verification policy.

These checks are not only the responsibility of the tax department. Purchasing, finance, accounts payable and other employees who work with suppliers may also need to follow the updated procedures.

Why Is Article 54(bis) of the UAE VAT Law Important?

Article 54(bis) of the UAE VAT Law deals with input VAT recovery when a supply is connected to tax evasion. Under the applicable legal provisions, a business may be denied an input VAT deduction if it knew or should reasonably have known that the supply was connected to tax evasion. This makes it important for businesses to carry out appropriate checks and keep evidence of their findings.

For example, a supplier may offer goods at a price that is much lower than the usual market price without giving a reasonable explanation. Another supplier may ask the business to make payment to an unrelated third party without explaining why. These situations do not automatically prove tax evasion, but the business should investigate them and keep records of the explanation and supporting evidence.

A valid tax invoice alone may not be enough to support an input VAT claim if other applicable conditions have not been met. Businesses should therefore check both the supplier and the individual purchase before claiming input VAT. If a transaction raises concerns, the business should review the facts and obtain appropriate tax advice where necessary.

Key Supplier Verification Requirements

1. Check the Supplier's Identity and Business Registration

Businesses must verify a supplier when dealing with them for the first time. They must also repeat the verification when dealing with an existing supplier that has not been verified during the previous 12 months. The checks depend on whether the supplier is an individual or a company.

For an individual supplier, businesses must obtain a copy of valid identification, such as an Emirates ID or passport. They must also meet the supplier in person or virtually before the supply takes place. These steps help the business confirm who it is dealing with.

For a company, businesses must check its incorporation details through an official database or obtain a copy of its certificate of incorporation. They must also verify the identity of the person authorised to represent the company, such as a director, agent or employee, and obtain a copy of that person's valid identification. The information collected should match the available business records.

2. Confirm the Supplier Has a Real Business Location

Businesses must check whether their suppliers have an actual place of business. This can be done through suitable electronic methods or a physical site visit. They should also consider whether the location is suitable for the supplier's business activities.

For example, a supplier claiming to operate a large warehouse should have a business location and supporting information that are consistent with those activities. If the location does not appear suitable, the purchasing business should investigate further. It should record what was checked and keep the evidence supporting its decision.

3. Look for Supplier Risk Indicators

Some changes in a supplier's business may require closer attention. The Decision identifies risk indicators such as frequent changes to the supplier's address, repeated changes to key employees and transactions that appear unusually large compared with the supplier's business size or history. Businesses should review these situations instead of ignoring them.

The specified indicators include:

  • More than two changes to the supplier's business address during the previous 12 months.
  • More than two changes to key employees or relevant contacts during the previous 12 months.
  • Transactions that are disproportionate or unexpected compared with the supplier's size and business history.

These indicators do not automatically mean that the supplier is involved in tax evasion. However, the business should investigate the circumstances and keep a clear explanation supported by available evidence. This explanation should be available to the FTA if requested.

4. Carry Out Additional Checks for Higher-Value Suppliers

Additional verification requirements apply when supplies received from a supplier exceed AED 375,000 during the previous 12 months or are expected to exceed AED 375,000 during the next 12 months. Businesses should monitor their purchases so they know when these additional checks become necessary. The threshold applies to supplies from the supplier, rather than being assessed only by looking at one invoice.

The additional checks include obtaining written confirmation from an authorised bank in the UAE that the supplier maintains a bank account. The confirmation must not contain relevant reservations or conditions. Businesses must also review reliable, publicly available reviews and media coverage about the supplier and consider client recommendations where available.

The purpose is to help businesses understand whether the supplier's background and activities are consistent with the transactions being carried out. Businesses should document their review and investigate information that raises concerns. Keeping these records can help demonstrate that the required checks have been completed.

What Should Businesses Check for Each Purchase?

Checking a supplier once does not mean that every future purchase is automatically verified. Businesses must also review each taxable supply they receive or accept before deducting input VAT, as required by Article 4 of FTA Decision No. 13 of 2026. The assessment should reflect the type of purchase and the circumstances of the transaction.

Check the Business Purpose of the Purchase

Businesses should understand why a purchase is being made and whether the supplier has a genuine role in the transaction. If an intermediary is involved, there should be a clear commercial reason for that person's involvement. Businesses should maintain relevant supporting documents that explain the arrangement.

Review the Price and Profit Margin

The price of goods or services should make commercial sense when compared with market conditions. If a supplier charges an unusually high or low price, the business should ask for an explanation and keep relevant evidence. Prices or margins must not be commercially unjustifiable or significantly different from the market without a clear commercial reason. An unusual price is not automatically a sign of wrongdoing, but it should be reviewed carefully.

Check the Goods, Services and Supplier's Activities

Businesses should check whether the goods or services they purchase are consistent with the supplier's normal business activities or licence. For goods purchased, businesses should also verify their authenticity, origin and the supplier's ownership or right to dispose of them. Relevant documents may include purchase orders, contracts and delivery confirmations.

Review Payment Methods and Arrangements

Payment arrangements should have a clear commercial reason. If a business is asked to pay a third party or transfer money to a bank account outside the supplier's country of incorporation, it should understand why the arrangement is necessary and keep supporting evidence. The explanation should be consistent with the available documents and other information about the transaction.

Payments must be made electronically under the Decision, subject to the applicable rules for cash payments. Where cash is used, the business must document the commercial reason, comply with the relevant tax legislation thresholds and ensure that the payment can be easily verified. Businesses should keep payment records and investigate any arrangement that cannot be reasonably explained.

Are Purchases Below AED 10,000 Exempt From Verification?

FTA Decision No. 13 of 2026 provides a limited exception for an individual taxable supply worth less than AED 10,000, excluding VAT. However, this exception is not available if the total value of supplies received from the same supplier exceeds AED 100,000 during the previous 12 months or is expected to exceed AED 100,000 during the next 12 months. Businesses must therefore consider both the value of an individual purchase and the total amount purchased from that supplier.

For example, a business purchases services worth AED 8,000, excluding VAT, from a supplier. The individual purchase may qualify for the exception if all relevant conditions are met. However, if the total value of supplies from that supplier crosses the AED 100,000 threshold under the specified rules, the exception is no longer available.

Businesses should monitor supplier spending rather than reviewing each invoice separately. They should also remember that this exception relates to the specified verification measures in the Decision. It does not remove other applicable VAT recovery, invoicing or recordkeeping requirements.

How Can UAE Businesses Prepare for the New VAT Rules?

Businesses should review their current procedures and identify any gaps in supplier checks, purchase approvals and recordkeeping. The following steps can help them prepare and maintain a consistent verification process.

Step 1: Review Supplier Records

Create a central register containing each supplier's legal name, identification or incorporation details, business address, trading activities and verification date. Review existing records to identify missing information or checks that need to be repeated. Keeping supplier information in one place makes it easier for finance and purchasing teams to find what they need.

Step 2: Monitor Supplier Spending

Track the total value of supplies received from each supplier during the previous 12 months and estimate expected purchases for the next 12 months. Pay particular attention to the AED 100,000 threshold for the limited low-value supply exception and the AED 375,000 threshold for additional supplier verification. Regular monitoring helps businesses identify when different checks apply.

Step 3: Create a Written Verification Policy

Article 5 of the FTA Decision No. 13 of 2026 requires businesses to maintain a documented verification policy. The policy should identify the employees responsible for carrying out, reviewing and supervising the required checks. It should also explain these employees’ responsibilities and authority so that their role in the verification process is well understood.

Step 4: Include Checks into Daily Business Activities

Supplier verification should be part of the normal purchasing and payment process. Businesses should include the relevant checks when onboarding suppliers, approving purchases, receiving goods or services, processing invoices and reviewing payments. They should also establish a clear process for investigating unusual prices, third-party payments and missing documents.

Step 5: Keep Evidence of the Checks Conducted

Businesses should maintain a record of the checks conducted, the documents reviewed and any concerns identified during the process. If a supplier provides an explanation for an unusual arrangement, the business should retain that explanation with the relevant evidence. Records should be maintained in an organised manner so they can be found easily if the FTA requests them.

Step 6: Train Finance and Purchasing Teams

Employees who deal with suppliers, process invoices or prepare VAT returns need to understand the new requirements. Training should explain which checks are necessary, which documents must be retained and when a concern should be reported. Clear instructions can help teams follow the same process across the business.

Step 7: Conduct a VAT Compliance Audit

A VAT compliance audit can help a business identify gaps in its supplier checks, transaction reviews, payment records and input VAT claims. The review can also show whether employees are following the written verification policy. Businesses can then address missing documents or weaknesses in their procedures before they create bigger problems.

How Do the New Rules Affect VAT Return Filing?

The new verification requirements are also relevant when businesses prepare their VAT returns. Before claiming input VAT, finance teams should check whether the applicable recovery conditions have been met and whether the required verification evidence is available. This means that VAT return preparation may involve reviewing supplier records and purchase documents, not just checking invoice totals.

Businesses should compare their input VAT records with supplier verification documents and investigate transactions where information is missing or payment arrangements are unclear. If a purchase raises concerns, its VAT treatment should be assessed based on the facts and applicable legislation. Businesses should not automatically claim input VAT or permanently give up a deduction without properly reviewing the circumstances.

Professional VAT return filing support can help businesses review their records, identify potential issues and prepare VAT returns with appropriate supporting documents. Regular reviews can also help finance teams maintain accurate records and follow the applicable requirements. Businesses should seek professional advice when they are unsure whether a particular transaction qualifies for input VAT recovery.

How A&A Tax Consultants LLC Can Help

Understanding the UAE VAT input tax verification requirements can be challenging, particularly for businesses that work with many suppliers. A&A Tax Consultants LLC supports UAE businesses with VAT advisory, compliance reviews and VAT return preparation. Its services can help businesses review their existing procedures, identify documentation gaps and assess the VAT treatment of relevant transactions.

A review of your VAT procedures can help identify missing supplier information, incomplete transaction records and areas where internal checks may need improvement. Businesses can also receive guidance on maintaining supporting documents and reviewing transactions that raise questions about input VAT recovery. If your business needs help preparing for a VAT compliance audit or reviewing its supplier verification procedures, contact A&A Tax Consultants LLC for VAT advisory services.

Frequently Asked Questions

1. Does every UAE VAT-registered business need to verify its suppliers?

Businesses must follow the supplier verification measures required by FTA Decision No. 13 of 2026 whenever they apply. The checks needed depend on the supplier, the transaction and the conditions set out in the Decision. A limited exception is available for certain low-value supplies, but businesses must confirm whether they meet all of the conditions before relying on it.

2. Is a valid tax invoice enough to claim input VAT?

No, a valid tax invoice is important, but it may not be enough on its own. Businesses must also meet the applicable input VAT recovery conditions and complete the verification checks required for their suppliers and purchases. They should keep the relevant supporting documents to show that these requirements have been considered.

3. How often should businesses verify existing suppliers?

Businesses must verify a supplier when dealing with them for the first time. They must also repeat the verification when dealing with an existing supplier that has not been verified during the previous 12 months. Keeping verification dates in a central register can help businesses identify when checks need to be repeated.

4. What should a business do if a supplier fails verification?

The business should investigate the missing information or concern and document the steps taken. It should review the available evidence and seek clarification or additional documents where necessary. The effect on input VAT recovery depends on the circumstances and applicable VAT legislation, so businesses should obtain appropriate advice before deciding how to treat the transaction.

5. What is the AED 375,000 supplier verification threshold?

Additional supplier verification measures apply when supplies received from a supplier exceed AED 375,000 during the previous 12 months or are expected to exceed that amount during the next 12 months. These additional checks include obtaining the required written bank confirmation and reviewing relevant public information about the supplier. Businesses should monitor supplier spending to identify when these requirements apply.

6. Can businesses skip verification for purchases below AED 10,000?

The Decision provides a limited exception for individual taxable supplies worth less than AED 10,000, excluding VAT. The exception is unavailable if total supplies from the same supplier exceed AED 100,000 during the previous 12 months or are expected to exceed that amount during the next 12 months. Businesses must also continue meeting other applicable VAT, invoicing and recordkeeping obligations.

7. What records should businesses keep for VAT verification?

Businesses should keep documents showing that they checked supplier identity, business registration and other relevant details. They should also retain evidence relating to individual purchases, payment arrangements and explanations for unusual transactions. A written verification policy and organised supporting records are important parts of the required process.

Strengthen Your VAT Verification Process

The UAE VAT input tax verification requirements make it important for businesses to check their suppliers and purchases carefully before claiming input VAT. Maintaining accurate supplier records, reviewing unusual transactions and keeping supporting documents can help businesses follow the applicable rules. Businesses should review their procedures regularly and seek professional advice when they are unsure how the requirements apply to a particular purchase.