The Federal Tax Authority has issued Decision No. 13 of 2026 on the measures, procedures and conditions required from Taxable Persons to verify the validity and integrity of supplies before deducting Input Tax. Issued on 22 July 2026, takes effect on 1st October 2026 — leaving businesses with a narrow runway to get their processes in order.
In practical terms, this shifts Input Tax recovery from a documentation exercise into a due-diligence exercise. Here’s what it covers:
Verifying the supplier itself
- Identity checks: Emirates ID or passport for individual suppliers, plus a physical or virtual meeting before the supply is made.
- For corporate suppliers: verification of incorporation details against official databases (or a copy of the incorporation certificate), and ID verification of the authorised director, agent or employee.
- Confirming the supplier has a genuine, active place of business consistent with the nature of its activity — via electronic checks or a field visit.
- Screening for risk indicators: more than two changes of address or key personnel in 12 months, or transaction volumes/values out of step with the supplier’s normal business. Where a flag is triggered, a documented, justified explanation must be kept on file and produced to the FTA on request.
- Where dealings with a supplier exceed (or are expected to exceed) AED 375,000 over any 12-month period: obtain written bank account confirmation from a UAE-regulated bank, and review publicly available reputational information for red flags.
Verifying each supply received
- A general assessment confirming the transaction rests on genuine commercial grounds.
- Payment terms must be commercially justifiable — third-party payment involvement or payment to accounts outside the supplier’s country of incorporation needs a documented rationale; electronic payment is expected, with cash only where justified, within legal thresholds, and easily traceable.
- Pricing and margins must be checked against market norms, with any material deviation explained.
- The goods or services supplied must fall within the supplier’s licensed activity, and the authenticity, origin and ownership of goods must be verifiable.
- Where a supplier acts as an intermediary, its commercial role in the supply chain must be clearly explainable.
Ongoing procedures and governance
- Supplier verification is required on first dealing, and must be refreshed if more than 12 months have passed since the last check.
- Every taxable supply received must be individually assessed as per the conditions set out above.
- All verification steps and supporting evidence must be documented and retained for FTA review.
- Businesses must maintain a documented internal policy naming who is responsible for implementing, reviewing and supervising these procedures.
Where the relief applies: Taxable Persons may skip these measures for supplies where the consideration (excluding VAT) is under AED 10,000 — but this relief falls away once total supplies from that supplier pass AED 100,000 in a rolling 12-month period (past or projected).
With the effective date just weeks away, businesses should be reviewing supplier onboarding, procurement approval workflows, payment controls and record-keeping now — a gap here could put Input Tax recovery itself at risk, not just create an administrative burden.
Our team at AgileVertex Advisory is helping clients map their current supplier and procurement processes against this Decision, and build the documentation trail the FTA will expect. Get in touch if you’d like a readiness review ahead of 1st October 2026.
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