The latest UAE VAT update has an important date for VAT registered businesses: 1 October 2026.
From this date, FTA Decision No. 13 of 2026 introduces specific measures that taxable persons must take to verify the validity and integrity of their suppliers and the supplies they receive before claiming input VAT.
The decision was issued on 22 July 2026 and published by the Federal Tax Authority (FTA) on 20 August 2026. The FTA's latest public clarification, VATP046, issued on 4 September 2026, explains the wider VAT Law amendments. These are two separate developments, but the October 1 supplier verification requirement is the most immediate change for businesses claiming input VAT. (tax.gov.ae)
What changed in UAE VAT from 1 October 2026?
The new requirement comes from Article 54 bis of the UAE VAT Law and FTA Decision No. 13 of 2026.
In simple terms, a business claiming input VAT will need to carry out prescribed checks on the supplier and the supply before making the deduction.
The reason is linked to tax evasion. If a supply forms part of a transaction or supply chain connected to tax evasion, and the business knew or should have known about that connection, the input VAT deduction can be denied.
Article 54 bis is the underlying VAT rule that allows input VAT to be rejected in these circumstances. Decision No. 13 of 2026 sets out the verification measures businesses must follow. (tax.gov.ae)
The decision applies to taxable persons registered or required to register for VAT and takes effect on 1 October 2026. Supplier verification is required when dealing with a supplier for the first time, or when that supplier has not been verified during the previous 12 months. (tax.gov.ae)
Who needs to follow the new VAT verification rules?
The rules are relevant to VAT registered businesses that receive taxable supplies and claim input VAT on those purchases.
That includes businesses buying goods or services from local suppliers, distributors, contractors, consultants and other vendors.
The level of checking depends on the supplier and the value of the supplies. One important threshold is AED 375,000.
The AED 375,000 test applies at the supplier level. It is based on the total value of supplies received from that supplier during the relevant 12 month period, or the value expected to be received during the next 12 months. It does not refer to the value of one individual purchase. Where that total exceeds AED 375,000, additional supplier checks apply. These include verifying that the supplier has a bank account and reviewing available client recommendations and reliable public information about the supplier. (tax.gov.ae)
The decision also contains an exception for an individual taxable supply of less than AED 10,000, excluding VAT. However, this exception does not apply when the total value of supplies received from the same supplier exceeds AED 100,000 over the relevant 12 month period. (tax.gov.ae)
Threshold | What it means |
|---|---|
Less than AED 10,000, excluding VAT | Verification measures for the individual taxable supply may be disregarded, subject to the AED 100,000 supplier limit |
Exceeds AED 100,000 | The AED 10,000 exception no longer applies for supplies from that supplier |
Exceeds AED 375,000 | Additional supplier checks, including bank account verification and review of available recommendations and reliable public information, apply |
These thresholds should be assessed based on the specific rules in Decision No. 13 of 2026. (tax.gov.ae)
What supplier checks are required?
The decision separates supplier verification from supply verification.
For the supplier, the business needs to verify the supplier's identity. For an individual supplier, this includes obtaining valid identification and meeting the supplier in person or virtually before the supply.
For a legal entity, the business needs to verify its incorporation through official databases or obtain valid incorporation documentation. It must also verify the identity of the director, agent or employee authorised to represent the supplier. (tax.gov.ae)
The business also needs to check the supplier's address and place of business. The FTA decision says businesses should verify that an actual place of business exists and that it is compatible with the supplier's activities. (tax.gov.ae)
There are also specific risk indicators to consider. These include a supplier changing its address or key employees more than twice in the previous 12 months, or conducting transactions that appear disproportionate or unexpected compared with the size and history of the business.
If such an indicator exists, the business should retain a clear and justified explanation that does not conflict with the available evidence. (tax.gov.ae)
For suppliers where the total value of supplies exceeds AED 375,000 during the relevant 12 month period, the additional bank account and public information checks also apply. (tax.gov.ae)
What supply checks are required?
The second level concerns the actual purchase or supply.
Businesses will need to assess whether the transaction has a genuine commercial reason and whether the payment terms make commercial sense. Payments should generally be made electronically. Cash payments need a documented commercial reason and must remain within the applicable tax thresholds. (tax.gov.ae)
The business should also consider whether:
- The price or profit margin is commercially reasonable.
- The goods or services fall within the supplier's normal or licensed business activities.
- Goods received are authentic and their origin can be established.
- The supplier has ownership of the goods or the right to dispose of them.
- An intermediary involved in the transaction has a clear commercial reason for its role. (tax.gov.ae)
This is where ordinary bookkeeping records become important. A supplier invoice should be supported by enough information to show what was purchased, from whom, why the transaction took place and how it was paid.
Businesses already following good VAT compliance practices will have many of the underlying records needed for these checks.
What should businesses do before 1 October 2026?
The deadline is close, so businesses should focus on putting a workable process in place.
Start by reviewing your active suppliers and identifying those from whom purchases could exceed AED 100,000 or AED 375,000 over a 12 month period. Also identify suppliers you have not verified during the previous 12 months.
Then document who will perform the checks, who will review them and who has responsibility for final approval. FTA Decision No. 13 requires businesses to maintain a documented policy identifying the people responsible for implementing, reviewing and supervising the verification procedures. (tax.gov.ae)
Keep evidence of the checks performed. This can include supplier identification, incorporation information, business address checks, explanations for unusual risk indicators, payment information and records supporting the commercial purpose of the transaction.
The decision specifically requires taxable persons to document their verification steps and retain the supporting documents and records so the FTA can verify that the requirements were followed. (tax.gov.ae)
Other UAE VAT changes businesses should know
Supplier and supply verification is the main immediate compliance change taking effect on 1 October. The September 4 VATP046 clarification also covers several other amendments to the UAE VAT Law.
These include changes relating to the definition of a non resident person, reverse charge rules, tax invoices and tax credit notes, excess recoverable VAT, administrative penalties and input VAT connected with tax evasion. (tax.gov.ae)
The VAT framework also continues to develop around electronic invoicing. The amended VAT Law includes definitions for the Electronic Invoicing System, Electronic Invoice and Electronic Credit Note, and clarifies the relationship between electronic invoices and VAT tax invoices. These provisions apply when the Electronic Invoicing System is implemented for the relevant registrants. They should therefore be treated separately from the 1 October 2026 supplier verification requirement. (tax.gov.ae)
Businesses should treat these as separate compliance developments and assess which ones apply to their activities.
Latest UAE VAT update: what should you check now?
The first priority should be the 1 October 2026 supplier verification requirement.
Review your suppliers, check the AED 10,000, AED 100,000 and AED 375,000 thresholds, identify suppliers requiring verification, document supplier and supply checks, and assign clear responsibility for carrying them out. The FTA's Decision No. 13 of 2026 is the key reference for the new verification requirements, while VATP046 provides the latest broader clarification of the amended VAT Law. (tax.gov.ae)
If your business regularly claims input VAT, now is the right time to review whether your existing purchase records, supplier documentation and VAT records are sufficient for the new requirements.
