FTA Decision No. 13 of 2026: UAE VAT Input Tax Rules

VAT input tax recovery in the UAE will require more structured supplier and transaction verification from 1 October 2026 under FTA Decision No. 13 of 2026. The Decision sets out the measures, procedures, and conditions that taxable persons must apply before deducting VAT input tax, including supplier identity checks, business verification, risk assessment, payment review, supply validation, and record keeping. The Decision was issued on 22 July 2026 and applies to taxable persons receiving supplies before input tax deduction.

What FTA Decision No. 13 of 2026 changes for VAT input tax

FTA Decision No. 13 of 2026 applies for the purposes of Article 54(bis) of the UAE VAT Law. Its practical effect is to place a clearer compliance obligation on taxable persons to verify the validity and integrity of supplies before claiming VAT input tax. This makes input tax recovery a matter of documented supplier and transaction governance, rather than a VAT return exercise alone. Businesses can refer to the UAE Federal Tax Authority’s official FTA VAT legislation page for the current VAT legislative framework and related FTA decisions.

For UAE businesses, the Decision should be considered as part of wider VAT governance. Businesses reviewing their compliance processes may also find it useful to consider recent UAE VAT changes every business should know when assessing whether existing supplier onboarding, accounts payable, and return preparation procedures remain appropriate.

Key points include:

• The Decision comes into effect from 1 October 2026.
• The checks apply before input tax is deducted on supplies received.
• The requirements cover both the supplier and the specific supply.
• Verification steps must be documented and supported by records.
• The FTA may request evidence showing that the checks were properly completed.

The practical impact is that input tax recovery should no longer be treated as a VAT return review only. Procurement, finance, and tax teams should work from a shared process so that checks are completed before the deduction is claimed.

Supplier verification before deducting VAT input tax

The Decision requires taxable persons to verify the identity of the supplier. The required approach depends on whether the supplier is a natural person or a legal person.

For a natural person, the taxable person must obtain a copy of valid proof of identity, such as an Emirates ID or passport, and meet the supplier either in person or virtually before making the supply. For a legal person, the taxable person must verify incorporation through official databases or obtain the certificate of incorporation. The taxable person must also verify the identity of the director, agent, or employee authorised to represent the supplier.

The Decision also requires checks on the supplier’s address and place of business. The taxable person must verify the existence of an actual place of business using appropriate electronic means or by conducting a field visit. The place of business should also be consistent with the nature of the supplier’s activities.

Important supplier review points include:

• Confirm the supplier’s identity and legal existence.
• Check whether the business premises are consistent with the supplier’s activity.
• Verify that the person acting for the supplier is properly authorised.
• Keep identity, incorporation, and verification evidence.
• Refresh supplier checks where the supplier has not been verified during the previous 12 months.

These procedures should be embedded into supplier onboarding and recurring supplier review workflows. Treating them as a later audit exercise may create a timing issue if VAT input tax has already been claimed without sufficient supporting evidence.

Risk indicators and high-value supplier reviews

The Decision requires taxable persons to assess supplier risk. It identifies several indicators that may require closer review, including repeated address changes, repeated changes in key employees, and transactions that appear unusual in volume, value, or nature when compared with the supplier’s size and commercial history.

Where one of these indicators applies, the taxable person must retain a clear and justified explanation and provide it to the FTA upon request. That explanation should be consistent with the evidence and information available to the taxable person.

Additional requirements apply 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. In those cases, the taxable person must verify that the supplier has a bank account and review client recommendations where available. The Decision refers to written confirmation from an authorised UAE bank and to reviewing publicly available reviews and media coverage from reliable sources.

Review area	Trigger or condition	Practical action
Supplier re-verification	Supplier not verified in the previous 12 months	Refresh due diligence before further recovery
Risk indicators	Address, employee, or transaction profile concerns	Keep a written explanation and supporting evidence
Bank account confirmation	Supplies exceed or are expected to exceed AED 375,000	Obtain suitable confirmation from an authorised UAE bank
Public reviews and media	High-value supplier relationship	Review reliable sources for suspected tax evasion indicators
Small supply exception	Consideration below AED 10,000, subject to limits	Check whether the exception applies

A proportionate risk framework can help businesses distinguish routine supplier checks from enhanced review cases. Higher-value suppliers, unusual payment routes, or transactions outside the supplier’s normal profile should receive closer attention before input tax is recovered.

Supply verification and payment conditions

The Decision also requires taxable persons to verify the supply itself. Article 4 requires a general assessment of the supply’s conditions and confirmation that the supplier’s engagement in the transaction is based on genuine commercial reasons.

Payment terms are a central part of this review. The payment method and conditions should be commercially justifiable. If a third party is involved in making or receiving payment, or if payment is made to a bank account outside the supplier’s country of incorporation, there must be a reasonable commercial explanation that does not contradict the information available to the taxable person. The Decision also states that consideration should be paid by electronic means. Cash payments must be supported by a documented commercial reason, fall within applicable tax thresholds, and be easily verifiable.

The taxable person should also consider whether the pricing, margins, ownership, and commercial arrangements appear consistent with the transaction. This includes checking that prices or profit margins are not commercially unjustifiable, confirming that goods or services fall within the supplier’s ordinary or licensed activities, and verifying the authenticity, origin, ownership, or right to dispose of goods. Where the supplier acts as an intermediary, there should be a clear commercial reason for that role.

Practical controls include:

• Confirm that the transaction has a genuine commercial purpose.
• Check that payment routes align with the supplier and transaction facts.
• Review unusual pricing, profit margins, or intermediary arrangements.
• Retain evidence that goods or services match the supplier’s licensed activities.
• Document the commercial reason for any unusual supply or payment feature.

Sector-specific VAT treatment should also be considered where relevant. For example, education providers may need to assess both input tax controls and the VAT treatment of their activities, including the points covered in the UAE VAT education sector guide for 2026.

Procedures, documentation, and VAT input tax exceptions

Article 5 requires taxable person to verify the supplier when dealing with that supplier for the first time, or during recurring dealings where the supplier has not been verified over the previous 12 months. It also requires verification of each taxable supply received or accepted, documentation of the steps taken, and retention of supporting records. A documented policy must identify the people responsible for implementing, reviewing, and supervising the procedures, including their powers and responsibilities.

Article 6 provides an exception where the consideration, excluding VAT, is less than AED 10,000. However, that exception does not apply where total supplies from the supplier exceed AED 100,000 over the previous 12 months or are expected to exceed that amount over the next 12 months.

In practice, businesses may need to review how these requirements fit into their existing VAT and indirect tax compliance processes, particularly where supplier onboarding, accounts payable checks, and VAT return preparation are handled by different teams. WellTax can support UAE businesses with mapping these requirements into practical VAT compliance procedures, including supplier verification checks, documentation reviews, VAT return controls, and evidence retention processes.

A practical readiness plan should include:

1. Update supplier onboarding forms to include the required verification checks.
2. Add a 12-month supplier re-verification control.
3. Introduce enhanced review steps for suppliers crossing the AED 375,000 threshold.
4. Add transaction-level checks for pricing, payment method, and commercial rationale.
5. Maintain a written policy assigning responsibility to finance, procurement, and tax teams.
6. Keep evidence in a format that can be provided to the FTA upon request.

Conclusion

FTA Decision No. 13 of 2026 introduces a more evidence-based approach to input tax recovery in the UAE. From 1 October 2026, taxable person should be prepared to show that supplier checks, transaction reviews, payment assessments, and internal responsibilities were properly documented before claiming the VAT input tax.

The immediate priority for businesses is to review how supplier due diligence, accounts payable controls, purchase approvals, VAT return preparation, and document retention work in practice. Where checks are incomplete, unclear, or performed too late, the business may face difficulty supporting its recovery position if the FTA requests evidence.

As an FTA registered tax agent in the UAE, WellTax can assist businesses with VAT compliance reviews, supplier verification procedures, documentation checks, VAT return controls, and communications with the Federal Tax Authority where relevant.

Written by Keziah Nicole Dela Cruz, CPA, Senior Accountant & FTA Tax Agent, WellTax.