The FTA has issued Decision No. 13 of 2026, effective 1 October 2026, introducing new requirements for taxable persons to verify the validity and integrity of suppliers and supplies before claiming input VAT.
Clause 3 of Article 54(bis0) introduced with effect from 1 October 2025 states that a Taxable Person may be considered to have been aware that a supply formed part of a supply or chain of supplies connected with Tax Evasion where the person failed to verify the validity and integrity of the supply before claiming Input Tax. FTA Decision No. 13 of 2026 provides the specific measures, procedures and conditions referred to under Clause 3 of Article 54(bis) of the UAE VAT Law.
The decision requires the taxable person receiving the supply to:
• Verify Supplier identity (EID/Passport/Trade License), legal existence and business premises (existence of actual place of business)
- In case of legal entities, verify the identity of authorized representative
- Meet the supplier, whether in person or virtually, before making the supply
• Assess the level of risk related to Supplier and conduct due diligence (get an understanding of frequency of changes in address, key employees, etc and retain supporting evidence)
• Where supplies from a supplier exceed or are expected to exceed AED 375,000 over a 12-month period, verify that the supplier maintains a UAE bank account.
• Verification of rationale of each supply transaction, pricing and profit margins, payment terms and methods (cash payments must have a documented commercial reason) and whether the goods/services fall within the supplier’s licensed and ordinary business activities and the authenticity, origin and ownership/right to dispose of goods
- Supplier verification is required when dealing with a supplier for the first time or where the supplier has not been verified during the preceding 12 months.
- Each taxable supply must be assessed
- Documenting verification procedures and maintaining an internal policy
A limited exception to the above requirements applies if the taxable supplies received is below AED 10,000, subject to the threshold of AED 100,000 received from the same supplier over the past 12 months or expected to receive in the next 12 months.
Businesses should review their supplier onboarding, procurement and VAT input tax procedures effective from 1 October 2026.
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Contributor
CA Mahalaxmi Mallya is a Chartered Accountant with over nine years of experience in direct and indirect taxation, including more than four years of post-qualification experience in the UAE. She has extensive expertise in UAE VAT, Corporate Tax, e-invoicing and Economic Substance Regulations (ESR) compliances.
In the UAE, she advises clients on complex VAT and Corporate Tax matters, supporting tax compliance frameworks, audits, impact assessments, private clarifications, and e-invoicing GAP assessments. She currently serves as a Tax Technical Manager at EVAS Constantin.
