FTA Decision No. 13 of 2026: New VAT Supplier Verification Requirements in the UAE
The UAE Federal Tax Authority (FTA) has issued Decision No. 13 of 2026, introducing new measures, procedures and conditions for taxable persons to verify the validity and integrity of supplies before deducting Input Tax.
Issued on 22 July 2026, the Decision will come into effect from 1 October 2026. It introduces greater emphasis on supplier due diligence, transaction verification, risk assessment and maintaining appropriate supporting documentation.
What is FTA Decision No. 13 of 2026?
FTA Decision No. 13 of 2026 sets out the measures and conditions that taxable persons must follow when verifying the validity and integrity of supplies received before deducting Input Tax.
The requirements broadly cover:
- Supplier identity and business verification
- Verification of the supplier’s place of business
- Assessment of supplier risk indicators
- Verification of payment arrangements
- Assessment of the underlying supply
- Verification of goods and services
- Maintaining supporting documents and records
- Establishing documented internal verification policies
Supplier Verification Requirements
Businesses are required to verify the identity of their suppliers. - For suppliers who are natural persons, businesses must obtain valid identification, such as an Emirates ID or passport, and meet the supplier either in person or virtually before the supply.
- For legal entities, businesses must verify incorporation through official databases or obtain a valid certificate of incorporation. The information should correspond with the supplier’s name, address, employees and other relevant details.
- The identity of the director, agent or authorised representative dealing with the business must also be verified through valid identification documents.
- Verification of Supplier Address and Business Activity
Taxable persons must also verify that the supplier has an actual place of business. This can be established through appropriate electronic means or by conducting a field visit. - The supplier’s place of business should also be compatible with the nature of its activities.
This requirement highlights the importance of incorporating supplier due diligence into procurement and vendor onboarding procedures.
Key Supplier Risk Indicators
The Decision identifies several risk indicators that businesses should consider when assessing suppliers.
These include:
- The supplier changing its address more than twice within the previous 12 months.
- The supplier changing key employees or managers more than twice within the previous 12 months.
- Transactions that are disproportionate or unexpected in terms of volume, value or nature compared with the size and business history of the supplier.
Where a risk indicator applies, the taxable person should retain a clear and justified explanation and provide it to the FTA upon request.
Additional Requirements for Suppliers Above AED 375,000
Additional checks apply where supplies received from a supplier exceed AED 375,000 during the previous 12 months, or are expected to exceed AED 375,000 during the following 12 months.
In such cases, the taxable person must verify that the supplier has a bank account by obtaining written confirmation from an authorised bank in the UAE. - Businesses must also review reliable publicly available reviews and media coverage relating to the supplier and assess whether there are indicators of suspected Tax Evasion.
Verification of the Underlying Supply - The requirements do not stop at verifying the supplier.
Taxable persons must also assess the underlying transaction and ensure that the supplier’s involvement is based on genuine commercial reasons. - Payment arrangements should be commercially justifiable. Where a third party is involved in making or receiving payment, or where payment is made to a bank account outside the supplier’s country of incorporation, there should be a reasonable commercial explanation.
- Electronic payment methods are required, while cash payments should have a documented commercial reason, comply with applicable tax thresholds and be easily verifiable.
Checking Prices, Goods and Services
Businesses should also assess whether the commercial circumstances of a transaction are reasonable.
This includes verifying that: - Prices or profit margins are not commercially unjustifiable or significantly different from market conditions without a clear reason.
- Goods or services fall within the supplier’s ordinary or licensed activities.
- The authenticity and origin of goods are verified. The supplier owns the goods or has the right to dispose of them.
- Any intermediary’s involvement has a clear and justifiable commercial reason.
Documentation and Internal Controls - One of the most important aspects of the Decision is the requirement to document the verification process.
- Taxable persons must document the verification steps taken for each supplier and supply and retain supporting documents and records that enable the FTA to verify compliance.
- Businesses must also maintain a documented policy identifying the persons responsible for implementing, reviewing and supervising the verification procedures, including their powers and responsibilities.
AED 10,000 Exception and AED 100,000 Threshold - The Decision provides an exception for taxable supplies where the consideration, excluding VAT, is less than AED 10,000.
- However, this exception does not apply where the total value of supplies received from the same supplier exceeds AED 100,000 during the previous 12 months or is expected to exceed AED 100,000 during the following 12 months.
- Businesses should therefore consider their cumulative transactions with each supplier rather than assessing invoices individually.
How Should Businesses Prepare? - With the Decision taking effect from 1 October 2026, businesses should review their existing VAT and procurement processes and identify any potential gaps.
- Key preparation steps include:
- Review supplier onboarding and due diligence procedures.
- Introduce a supplier verification checklist.
- Verify supplier identity and incorporation details.
- Assess supplier addresses and licensed business activities.
- Establish procedures for identifying and documenting risk indicators.
- Review payment arrangements and supporting evidence.
- Strengthen Input Tax documentation.
- Implement transaction verification procedures.
- Clearly assign responsibility for supplier verification.
- Develop and maintain a documented internal verification policy.
How We Can Help - We can assist UAE businesses in preparing for the implementation of FTA Decision No. 13 of 2026.
- Our team can support businesses with:
- VAT compliance reviews
- Supplier due diligence assessments
- Supplier verification procedures
- Risk and control assessments
- Input Tax documentation reviews
- Internal VAT policy development
- Compliance gap assessments
- Implementation of appropriate controls
Businesses should begin reviewing their processes before 1 October 2026 to ensure that appropriate procedures, controls and documentation are in place.
For professional assistance with assessing the impact of FTA Decision No. 13 of 2026 on your business, contact RNG Auditors LLC or RMC LLC.