UAE VAT · Input Tax Recovery
Verify before you deduct.
From 1 October 2026, recovering input VAT in the UAE carries a precondition: you must verify — and be able to prove you verified — the validity and integrity of your suppliers and the supplies they make to you. FTA Decision No. 13 of 2026 sets out exactly what that verification looks like.
What the Decision does
Arts. 1–2 · ScopeApplies to every Taxable Person — any business registered, or required to register, for UAE VAT — in respect of the supplies it receives.
The Decision operationalises Article 54(bis) of the VAT Law, introduced to counter tax evasion and missing-trader schemes running through legitimate supply chains.
Until now, recovering input VAT rested chiefly on holding a valid tax invoice and using the purchase for taxable activity. Decision No. 13 adds a third leg: due diligence on the supplier and on each supply, performed before deduction and evidenced in your records.
The Decision prescribes the measures in two layers — who you are buying from (Article 3) and what you are buying (Article 4) — then fixes the cadence, documentation and exemptions (Articles 5–6).
Know your supplier
Art. 3 · Supplier verificationIdentity
Art. 3(1)- Individuals: obtain a copy of a valid Emirates ID or passport, and meet the supplier — in person or virtually — before the supply takes place.
- Companies: verify incorporation against official databases or the certificate of incorporation; details must match the entity's actual name, address and personnel.
- Verify the identity of the director, agent or employee authorised to represent the supplier (valid Emirates ID or passport on file).
Place of business
Art. 3(2)- Confirm an actual place of business exists — by appropriate electronic means or a field visit.
- Confirm the premises are compatible with the nature and scale of the activity carried on.
Risk indicators
Art. 3(3)- Address changed more than twice in the previous 12 months.
- Key people — managers, or your day-to-day contacts — changed more than twice in 12 months.
- Transactions disproportionate or unexpected in volume, value or nature against the supplier's size and history.
- If any indicator applies: retain a clear, justified explanation, consistent with the evidence you hold, and produce it to the FTA on request.
Financial standing
Art. 3(4)- Obtain written confirmation from a UAE-licensed bank that the supplier holds a bank account — free of reservations or conditions. It need not be addressed to you.
- Review publicly available client references, reviews and media coverage from reliable sources — consistent with the supplier's business, with no indicators of suspected tax evasion.
- Triggered when 12-month dealings with the supplier exceed AED 375,000 — looking back, or expected looking forward.
Check every supply
Art. 4 · Supply verificationCommercial substance
Art. 4(1)- Make a general assessment of the conditions surrounding the transaction.
- Satisfy yourself the supplier's participation rests on genuine commercial reasons.
Payment discipline
Art. 4(2)- Payment method and terms must be commercially justifiable.
- Pay by electronic means. Cash requires a documented commercial reason, must stay within the thresholds in tax legislation, and must be easily verifiable.
- Third parties in the payment flow — or payment to an account outside the supplier's country of incorporation — need a reasonable commercial explanation that doesn't contradict what you know.
Market pricing
Art. 4(3)(a)- Prices and margins must not be commercially unjustifiable, or significantly out of line with market conditions without a clear reason.
Goods, licences & intermediaries
Art. 4(3)(b)–(d)- The supply must sit within the supplier's ordinary activity and the scope of its commercial licence.
- Verify the authenticity and origin of goods, and the supplier's ownership or right to dispose of them.
- Where the supplier acts as an intermediary, its role in the chain needs a clear, justifiable commercial explanation.
Cadence & paperwork
Arts. 5–6 · Procedures & exceptionsWhen to verify. Run the Article 3 supplier checks on first dealing, and again whenever 12 months have passed since the last verification. Run the Article 4 checks on every taxable supply you receive or accept.
Article 5(4) requires a documented policy naming who implements, reviews and supervises verification — with powers and responsibilities set out clearly — retained with your designated tax records.
Document everything. The verification steps taken, and the supporting evidence behind them, must be retained in a form that lets the FTA confirm they were properly carried out. In practice, an undocumented check is treated as a check not done.
The Decision scales with the size of the relationship. Depth of diligence follows the money:
| Relationship / supply | Tier | What applies |
|---|---|---|
| < AED 10,000 single supply, excl. VAT |
Relief | Checks may be skipped for that supply — Art. 6(1). |
| > AED 100,000 same supplier, past or expected 12 months |
Standard | Relief falls away — full verification applies even to small invoices from that supplier — Art. 6(2). |
| > AED 375,000 same supplier, past or expected 12 months |
Enhanced | Everything above, plus bank-account confirmation and reputation screening — Art. 3(4). |
| All other taxable supplies | Standard | Full supplier verification (Art. 3) and supply verification (Art. 4), documented per Art. 5. |
What you need to do
FW Global · Readiness roadmapTick steps off as you complete them — progress is saved on this device.
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Map your supplier base against the thresholds
Rank every supplier by 12-month spend — actual and reasonably expected — against the AED 10,000 / 100,000 / 375,000 lines. This single exercise dictates the depth of diligence each supplier needs.
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Build a verification file for each in-scope supplier
Emirates ID or passport of the individual or authorised representative; incorporation verified against official databases; evidence of a real place of business consistent with the activity. Record a first-meeting note — in person or virtual — for individual suppliers.
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Close the enhanced-tier gaps
For suppliers above AED 375,000: request the bank-account confirmation letter from a UAE-licensed bank now — lead times are real — and run and file the references, reviews and media screening.
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Issue the written verification policy
Article 5 makes this mandatory, not optional: a documented policy naming who implements, reviews and supervises the checks, with clear powers and responsibilities, retained with your tax records.
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Wire the checks into procure-to-pay
Onboarding gates before a first purchase order; payment rules that default to electronic transfer; cash only with a documented commercial reason inside legal thresholds; escalation flags for third-party or out-of-country payment requests.
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Brief procurement, AP and finance
The people placing orders and releasing payments are your first line. They need to recognise the risk indicators and know when — and to whom — to escalate.
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Verify at the right moments
New supplier → full Article 3 verification before dealing. Existing supplier → re-verify once 12 months have passed. Every taxable supply → Article 4 checks before the input tax goes into your return.
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Monitor the risk indicators — and document exceptions
More than two address changes or key-people changes in 12 months, or transactions out of proportion to the supplier's size and history: whenever one triggers, file a clear, justified explanation at the time, not after an FTA query.
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Keep the file audit-ready
Retain evidence of every verification step, refresh supplier files on a 12-month calendar, and treat the file as part of the VAT return itself — your input tax deduction rides on it.
How FW Global can help
Move forward.
Thirty days is enough — with a disciplined sequence. Our UAE tax practice runs this as a fixed-scope readiness sprint.
- Supplier-base diagnosticThreshold segmentation of your vendor master, with a prioritised remediation list.
- Policy & process designThe Article 5 verification policy, drafted and embedded into your procure-to-pay and payment controls.
- Verification file build-outDocument collection, bank confirmations and screening files — including the AED 375,000+ enhanced tier.
- Readiness reviewA pre-October dry run against a simulated FTA information request, then periodic health checks.