Starting 1 October 2026, UAE businesses face new checks before they can deduct input tax on what they buy. Federal Tax Authority (FTA) Decision No. 13 of 2026 requires taxable businesses to verify their suppliers and the supplies they receive, and it tightens the rules around paying suppliers in cash. Here’s what the decision covers and what businesses should do before it takes effect.
- What is FTA Decision No. 13 of 2026?
- New checks businesses must carry out on suppliers
- What’s changing for cash payments
- Other checks required on the supply itself
- When verification is required, and the lower-value exception
- Who this affects, and what to do before 1 October 2026
- Key Takeaways
- FAQs
What is FTA Decision No. 13 of 2026?
FTA Decision No. 13 of 2026 was issued on 22 July 2026 and takes effect on 1 October 2026. It sets out the measures, procedures, and conditions a taxable business (a “Taxable Person” under UAE VAT law) must follow to verify the validity and integrity of the supplies it receives before it can deduct input tax on those supplies. The decision was made under Article 54(bis) of Federal Decree-Law No. 8 of 2017 on Value Added Tax.
In practice, businesses claiming input tax may need to demonstrate that they have carried out the required checks on the supplier and the supply itself, subject to the exceptions set out in the Decision.
New checks businesses must carry out on suppliers
Before claiming input tax on a supply, a business is expected to verify four things about the supplier it bought from.
Verifying the supplier’s identity
- Individual suppliers: obtain a copy of valid ID (Emirates ID or passport), and meet the supplier, in person or virtually, before the supply is made.
- Company suppliers: verify the company’s incorporation through official databases or a copy of its incorporation certificate, and verify the identity of whoever represents it (director, agent, or employee), again via Emirates ID or passport.
Verifying the supplier’s address and place of business
The business needs to confirm the supplier genuinely operates from an address, using electronic checks or a field visit, and that the location matches the kind of business the supplier claims to run.
Assessing supplier risk
A business should watch for three risk indicators, and be ready to explain them if the FTA asks:
- The supplier has changed address more than twice in the past 12 months.
- The supplier has changed its key managers or contacts more than twice in the past 12 months.
- The supplier’s transactions are unusually large, small, or otherwise out of character for a business of its size.
Verifying the supplier’s bank account (above AED 375,000)
Where a business receives more than AED 375,000 worth of supplies from one supplier over the previous 12 months, or expects to over the next 12 months, it must obtain written confirmation from a UAE bank that the supplier holds an account there, and review publicly available reviews and media coverage from reliable sources, assessing whether they are consistent with the nature and size of the supplier’s business and whether there are indicators of suspected tax evasion.
What’s changing for cash payments
The decision sets a clear preference for paying suppliers electronically. Paying in cash is still allowed, but only where there’s a documented, genuine business reason for it, the payment stays within the threshold set out in the relevant tax legislation, and the payment can be easily verified. Paying through a third party, or into a bank account outside the supplier’s home country, also now needs a clear commercial explanation.
Other checks required on the supply itself
Beyond the supplier, a business also has to look at the transaction itself:
- Confirm the price or profit margin is reasonable for the market, without an unexplained gap either way.
- Confirm the goods or services supplied fall within the supplier’s licensed business activity.
- Confirm the goods received are genuine, and that the supplier owns them or has the right to sell them.
- Where the supplier is acting as a middleman rather than supplying its own goods or services, confirm there’s a clear commercial reason for that arrangement.
When verification is required, and the lower-value exception
Supplier verification is required when dealing with a supplier for the first time, and again for recurring suppliers if they haven’t been verified within the previous 12 months. Each individual taxable supply a business receives also needs to be verified. Businesses must document the verification steps they take and keep the supporting records, and maintain a documented internal policy naming who is responsible for implementing, reviewing, and supervising the process, along with their powers and responsibilities.
There’s an exception for lower value supplies. Businesses may disregard these verification measures where the consideration for a taxable supply, excluding VAT, is less than AED 10,000. However, this exception does not apply if the total value of supplies received from the same supplier exceeds AED 100,000 over the previous 12 months, or is expected to exceed AED 100,000 over the next 12 months.
Who this affects, and what to do before 1 October 2026
The Decision applies to Taxable Persons in relation to verifying the validity and integrity of supplies they receive before deducting input tax, subject to the exceptions set out above. It’s especially relevant to property management companies, developers, agencies, and landlords who regularly pay contractors, maintenance providers, or other service suppliers, particularly where those payments have historically been made in cash.
Before the effective date, it’s worth reviewing supplier files for identity and incorporation documents, flagging any suppliers above the AED 375,000 threshold for bank verification, shifting remaining cash payments to electronic methods where possible, documenting the commercial reason for any payments that stay in cash, and putting a written verification policy in place that names who is responsible for the process.
Key Takeaways
- From 1 October 2026, businesses must verify suppliers and transactions before deducting input tax, under FTA Decision No. 13 of 2026.
- Suppliers must be identity checked, with their business address and activity confirmed.
- Where supplies received from a supplier exceed AED 375,000 over the previous 12 months, or are expected to exceed AED 375,000 over the next 12 months, additional bank account and supplier review requirements apply.
- Cash payments to suppliers are still allowed, but need a documented reason, must stay within the legal threshold, and must be easily verifiable.
- There’s an exception for supplies under AED 10,000, unless total supplies from that supplier exceed AED 100,000 over a rolling 12 month period.
- Businesses should review their supplier and payment processes, and put a documented verification policy in place, before the effective date.
Frequently Asked Questions
It’s a Federal Tax Authority decision setting out the checks a UAE business must carry out on its suppliers and the supplies it receives before deducting input tax under VAT. It takes effect on 1 October 2026.
Yes, but cash payments need a documented commercial reason, must stay within the threshold set in the relevant tax legislation, and must be easy to verify. Electronic payment remains the default expectation.
It applies to Taxable Persons under UAE VAT law, meaning any person registered or obligated to register for VAT, in relation to the supplies they receive before deducting input tax on them.
Yes. Businesses can disregard the verification measures for a taxable supply worth less than AED 10,000, excluding VAT. This exception doesn’t apply if total supplies received from that supplier exceed AED 100,000 over a rolling 12 month period.
The decision ties these checks to a business’s ability to deduct input tax on a supply, so a business that can’t show it carried out the required verification risks having that input tax disallowed.
1 October 2026.
