Verification of Supplies Prior To VAT Input Tax Deduction

Verification of Supplies Prior To VAT Input Tax Deduction

by | Aug 20, 2026

The Federal Tax Authority (“FTA”) has issued Decision No. 13 of 2026, setting out the measures and conditions for verification of suppliers and the supplies before claiming VAT Input Tax deductions. This decision shall be effective from 1 October 2026

Key Requirements

Taxable persons shall be required to perform appropriate due diligence with respect to suppliers and transactions before claiming Input Tax credit on such transactions, including

Key verification aspects Particulars the Taxable Person needs to verify
Supplier’s identity Identity of natural person or legal entity and its authorized representative with supporting document along with meeting with the supplier before the supply
Supplier’s Address Existence of an actual place of business and compatibility with the activities
Risk Indicators Frequent changes in address, key employee and unusual/disproportionate transactions
Bank account verification Required when the supplies exceed threshold of AED 375,000 in previous 12 months period or expected to exceed over next 12 months for a supplier
Substance of Supply
  • Assess the transaction and ensure that the supplier’s engagement in the transaction is based on genuine commercial reasons and on justifiable commercial terms
  • Verify the authenticity of the origin and ownership of goods including licensed activity of the supplier to conduct such business activities
Payment Verification
  • Ensure that the payment method and conditions are justifiable for commercial reasons.
  • Consideration should be paid by electronic means
  • If paid in cash, the payment must be based on a documented commercial reason
Circumstances of Supply Check market-based pricing, supplier’s licensed activities, authenticity and ownership of goods, and justification for any intermediary role
Exceptions (Non-applicability of this Decision) Individual supply below AED 10,000. However, the exception no longer applies if total supplies from the supplier exceed or are expected to exceed AED 100,000 in 12 months

Input VAT recovery will no longer rely solely on possession of a valid tax invoice; businesses will need to demonstrate reasonable steps were taken to verify the integrity and legitimacy of suppliers and transactions.

Key Actions Steps

  • Review existing vendor onboarding and due diligence processes
  • Update AP and procurement controls to capture required verification evidence
  • Develop a documented VAT verification policy with clear ownership and responsibilities
  • Identify high-value and high-risk suppliers for remediation before 1 October 2026
  • Train finance, tax, procurement, and compliance teams on the new requirements

Click to download the relevant FTA Decision

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