FTA has issued Decision No. 13 of 2026, setting out measures, procedures and conditions that Taxable Persons must follow to verify the validity and integrity of supplies before deducting Input Tax. The Decision was issued on 22 July 2026 and will take effect from 1 October 2026.
The UAE Federal Tax Authority has issued Decision No. 13 of 2026 on 22 July 2026, establishing due diligence requirements for Taxable Persons seeking to deduct Input Tax. The Decision applies to the verification of the validity and integrity of supplies received before Input Tax is deducted, in accordance with Article 54(bis) of the VAT Law.
The Decision requires Taxable Persons to verify both their suppliers and the circumstances surrounding supplies. It also sets requirements for documenting the checks and retaining evidence for review by the Authority.
Supplier identity and business checks
For natural persons, Taxable Persons must obtain a copy of valid proof of identity, including an Emirates ID or passport, and meet the supplier either in person or virtually before the supply is made.
Where the supplier is a legal person, the Taxable Person must verify its incorporation through official databases or obtain a certificate of incorporation. The incorporation details must be valid and consistent with the entity’s name, address, employees and other relevant information.
The identity of a director, agent or employee authorised to represent the supplier must also be verified using valid proof of identity, such as an Emirates ID or passport.
Taxable Persons must additionally establish that the supplier has an actual place of business, using appropriate electronic means or a field visit. The location must be compatible with the nature of the supplier’s activities.
Risk indicators and bank account checks
The Decision requires Taxable Persons to assess risks associated with suppliers. Relevant indicators include a supplier changing its address more than twice during the previous 12 months, changing key employees more than twice during that period, or undertaking commercial transactions that are disproportionate or unexpected in terms of volume, value or nature compared with the size and business history of the supplier.
Where such an indicator exists, the Taxable Person must retain a clear and justified explanation and provide it to the Authority upon request, provided the indicator does not conflict with available evidence or information.
Additional checks apply where supplies received from a supplier exceed AED 375,000 over the previous 12 months, or are expected to exceed that amount during the next 12 months.
In these circumstances, the Taxable Person must obtain written confirmation from an authorised bank in the State that the supplier has a bank account. The confirmation does not have to be issued to the recipient of the supply.
The Taxable Person must also review publicly available reviews and media coverage from reliable sources and assess whether these are consistent with the supplier’s business and whether they indicate suspected Tax Evasion.
Checks on transactions and payments
The Decision requires Taxable Persons to conduct a general assessment of each supply and establish that the supplier’s participation in the transaction has genuine commercial reasons.
Payment arrangements must also be commercially justifiable. Where a third party is involved in making or receiving payment, or payment is made to a bank account outside the supplier’s country of incorporation, there must be a reasonable commercial explanation that is consistent with the information and evidence available to the Taxable Person.
Consideration for a supply is to be paid by electronic means. Cash payments must have a documented commercial reason, comply with applicable thresholds under Tax legislation and be readily verifiable.
Taxable Persons must also assess whether the prices or profit margin are commercially justifiable and whether they differ significantly from market conditions without a clear reason.
Authenticity and nature of supplies
The requirements extend to the nature and authenticity of the Goods or Services received.
Taxable Persons must verify that the Goods or Services fall within the supplier’s ordinary activities or the activities it is licensed to conduct under its commercial licence.
For Goods, they must verify their authenticity and origin, as well as the supplier’s ownership or right to dispose of them.
Where a supplier acts as an intermediary, the Taxable Person must establish a clear and justifiable commercial explanation for the supplier’s role in the supply process.
Documentation requirements
The Decision requires supplier verification when a Taxable Person first deals with a supplier, or when dealing with a supplier again where that supplier has not been verified during the previous 12 months.
Each Taxable Supply received or accepted must also be verified in accordance with the specified requirements.
Taxable Persons must document the verification steps undertaken and retain supporting documents and records. These records must enable the Authority to assess whether the requirements have been correctly implemented.
Businesses must also maintain a documented policy identifying the persons responsible for implementing, reviewing and supervising verification procedures. The policy must clearly set out their powers and responsibilities and be retained at the designated location for required documents. Exception for supplies below AED 10,000
Decision No. 13 of 2026 allows Taxable Persons to disregard the specified verification measures for Taxable Supplies where the Consideration, exclusive of Value Added Tax, is less than AED 10,000.
The exception is not available where the total value of supplies received from the supplier exceeds AED 100,000 during the previous 12 months, or is expected to exceed AED 100,000 during the following 12 months.
Federal Tax Authority Decision No. 13 of 2026 is to be published in the Official Gazette. It will come into effect on 1 October 2026.
