As part of the UAE’s ongoing efforts to strengthen VAT compliance and safeguard the integrity of the input tax recovery mechanism, Article 54(bis) was added to the UAE VAT Federal Decree Law No. 8 of 2017 with effect from 1 January 2026. The article requires taxable persons to verify the validity and integrity of their suppliers and the supplies received from them as a condition of recovering input VAT, and empowers the Federal Tax Authority (“FTA“) to prescribe the applicable measures, procedures and conditions.The FTA has now issued Decision No. 13 of 2026 (the “Decision“), which sets out the mandatory verification requirements in detail. The Decision will be effective from 1 October 2026.
Overview of the Decision
1. Verification of supplier
Supplier verification is required before entering into a transaction with a new supplier. For existing supplier relationships, verification must be repeated if it has not been carried out in the previous 12 months. The specific requirements are as follows:
a. Identity verification:
- Where the supplier is a natural person, the taxable person must obtain a copy of a valid proof of identity (Emirates ID or passport) and meet the supplier either in person or virtually, before the supply takes place.
- Where the supplier is a legal person, the taxable person must verify the supplier’s incorporation through official databases or obtain a copy of the certificate of incorporation to confirm the incorporation details are valid and verify the identity of the authorised representative of the supplier.
b. Address verification: The taxable person must verify the existence of an actual place of business using electronic means or through a field visit and must ensure that the place of business is consistent with the nature of the supplier’s activities.
c. Risk assessment: The taxable person must assess whether any of the following risk indicators apply to the supplier:
- The supplier has changed its address or key employees more than twice in the previous 12 months.
- The supplier has undertaken transactions disproportionate or unexpected in volume, value or nature compared to the size and history of its business.
Where any of the above risk indicators are identified, the taxable person must retain a clear and justified explanation and provide it to the FTA upon request.
d. Bank account and client references: Where the value of supplies received from a single supplier exceeds or is expected to exceed AED 375,000 over any 12-month period, the Taxable Person must obtain a written bank confirmation that the supplier holds a bank account in the UAE and must review publicly available information and media coverage related to the supplier.
2. Verification of Supplies
Each taxable supply received or accepted must be individually verified by the taxable person with reference to the following:
a. Commercial rationale: The taxable person must ensure that the supplier has genuine commercial reasons for entering into the transaction.
b. Payment arrangement: The payment method and conditions must be justifiable for commercial reasons. The taxable person must have reasonable and documented commercial reasons in case of any non-standard payment arrangements, including third party payments, payments to overseas banks or cash payments.
c. Supply circumstances: The taxable person must verify:
- That prices or profit margins are not significantly different from market conditions without a clear reason;
- That the nature of the supply falls within the scope of the supplier’s licensed activity;
- The authenticity and origin of goods and the supplier’s ownership status; and
- The supplier’s commercial role where the supplier acts as an intermediary.
3. Record Keeping Requirements
The taxable person must maintain and retain the following:
- Documentation containing all verification steps and supporting records for the purposes of FTA’s inspection.
- Documented internal policy identifying the persons responsible for implementing, reviewing and supervising the verification procedures, including their powers and responsibilities.
4. De-minimis exception
The verification requirements do not apply where the consideration for a single taxable supply, exclusive of VAT, is less than AED 10,000. However, this exception is not available where the total value of supplies from the same supplier exceeds, or is expected to exceed, AED 100,000 over any 12-month period. Businesses should therefore track cumulative supplier spend, not just individual transaction values.
What This Means for Your Business
The Decision represents a significant change in the conditions for recovering input VAT. Until now, recovery has depended primarily on holding a valid tax invoice. From 1 October 2026, it will also require documented verification of both the supplier and the supply. Non-compliance carries a direct financial consequence: the FTA may deny the input VAT deduction, converting previously recoverable VAT into a real cost. Businesses with large or fragmented supplier bases, frequent cash transactions, or reliance on intermediaries should treat readiness as a priority.
To comply ahead of the 1 October effective date, businesses should consider the following:
- Supplier Onboarding: Update supplier onboarding processes to incorporate identity verification, address checks and risk assessments for all new and existing suppliers.
- Procurement Controls: Embed verification of the commercial rationale, payment arrangements and supply circumstances into procurement and accounts payable workflows for each taxable supply.
- Risk Monitoring: Establish ongoing monitoring for the risk indicators specified in the Decision, including frequent changes to supplier addresses, key personnel or unusual transaction patterns.
- Record Keeping: Implement or upgrade documentation systems to capture and retain all verification steps and supporting evidence in a format ready for FTA inspection.
- Internal Policies: Develop or revise a documented internal policy that clearly assigns responsibility for implementing, reviewing and supervising the verification procedures.
- De Minimis Tracking: Put controls in place to monitor cumulative supply values per supplier against the AED 10,000 / AED 100,000 thresholds.
How Can Al Tamimi Help?
Businesses will need to adapt their procurement, onboarding and accounts payable processes to meet the new verification requirements.
Al Tamimi & Company can help you evaluate your current position, design practical verification procedures suited to your operating model, and implement the documentation and controls required by the Decision. Whether you are building a supplier verification framework from scratch or strengthening existing processes, engaging early allows you to identify and address any gaps well ahead of the 1 October 2026 effective date.
Key Contacts
Shiraz Khan, Partner, Head of Taxation, s.khan@tamimi.com
Anuj Bhasin, Senior Associate, a.bhasin@tamimi.com
Marie Germain, Associate, m.germain@tamimi.com