A valid TRN and a clean tax invoice used to feel like enough to claim input VAT. Since 1 October 2026, they aren't. FTA Decision No. 13 of 2026 expects you to check the supplier and the transaction behind the invoice, and to be able to prove you did. Here's what that means in practice, in plain language.
Why Does Input VAT Recovery Now Need More Than an Invoice?
Input VAT recovery is the right to deduct the VAT you paid on business purchases from the VAT you owe. Until now, most finance teams treated a compliant tax invoice from a registered supplier as the finish line.
Decision No. 13 of 2026 is issued under Article 54(bis) of the VAT Law, introduced by Federal Decree-Law No. 16 of 2025. It requires taxable persons to verify suppliers and supplies before deducting input tax. The aim is to stop VAT being recovered on transactions linked to tax evasion, such as fake invoices and missing-trader chains.
The decision took effect on 1 October 2026, so it already applies to your current VAT periods.
What Does Article 54(bis) Say About Your Right to Deduct?
Two tests sit behind it, as described in Grant Thornton's summary:
- Actual knowledge: input VAT can be denied where a supply is linked to tax evasion, and you knew it.
- "Should have known": the FTA may also deny input VAT where you should have known. Commentary says that skipping the required checks can be treated as meeting that test.
That's why this is a documentation issue as much as a tax one. It doesn't mean every unchecked invoice is automatically disallowed, and the FTA's own guidance is the final word. But "we never checked" is a weak position.
Who Do You Need to Verify, and How Often?
Supplier checks apply at first dealing, and again if you haven't verified that supplier in the previous 12 months.
| Supplier type | What to obtain |
| Individual | Valid ID (Emirates ID or passport), plus meeting the person in person or virtually before the supply |
| Company | Proof of incorporation (official database or certificate), identity of the authorised representative, and confirmation that the business premises exist and suit the supplier's activity |
Then ask whether the supplier looks risky. Examples of risk indicators include more than two changes of address or key staff in 12 months, or transaction volumes that look out of proportion to the business's size and history. If a flag applies, keep a clear, justified explanation on file.
What Extra Checks Apply Above AED 375,000?
If actual or expected supplies from one supplier exceed AED 375,000 over 12 months, you also need:
- Evidence that the supplier holds a UAE bank account (Grant Thornton describes this as written confirmation from a UAE bank)
- A review of public information and reputation, such as reviews and media, for signs of evasion
Map your biggest suppliers first. That's where the enhanced checks land.
What Should You Check About Each Transaction?
Supplier checks aren't enough. Before deducting input VAT, review the supply itself:
- Commercial rationale: why is this supplier involved, and why now?
- Payment method and flow: cash, third-party, or offshore payments need a documented reason
- Price: is it reasonable against the market?
- Licence scope: does the supply fall within the supplier's licensed activities?
- Goods: do you know who owns them and where they came from?
- Intermediaries: is there a genuine business reason for the extra link in the chain?
Notice how many of these are questions your procurement team may already ask. The difference is that you now need to write down the answers.
Is There an Exception for Small Purchases?
Yes, a limited one. Verification may be skipped for supplies below AED 10,000 (excluding VAT), subject to conditions. The exception does not apply if supplies from that supplier exceed AED 100,000 over the previous 12 months, or are expected to exceed it over the next 12 months.
So the trap is the supplier who sends many small invoices. Each one looks exempt, but the running total says otherwise.
What Records and Policies Does the FTA Expect?
Two things:
- Evidence of every verification step, kept so the FTA can confirm it was done.
- A written policy that names who carries out, reviews, and supervises the checks, and sets out their powers and duties.
Spreadsheet notes and email threads will be hard to defend. You want supplier files, approval trails and transaction notes that can be pulled up quickly.
What Are the Consequences of Getting It Wrong?
Based on current commentary, the risks include denial of input VAT recovery, administrative penalties,s and closer scrutiny. The most common pitfalls:
- Relying solely on a valid tax invoice
- Onboarding suppliers with no risk check
- Assuming small invoices are automatically excluded
- Having no written policy
Treat a valid TRN and tax invoice as necessary but not sufficient.
How Can You Strengthen Your Process Now?
- [ ] Draft and approve a written verification policy
- [ ] Name the people responsible for checks, review, and oversight
- [ ] List suppliers above AED 100,000 and AED 375,000 and verify them first
- [ ] Add identity, premises and risk checks to supplier onboarding
- [ ] Build a re-verification reminder every 12 months
- [ ] Add payment, pricing and licence-scope checks to accounts payable review
- [ ] Store all evidence against the supplier and the invoice
- [ ] Train finance and procurement teams
- [ ] Confirm the final wording against the FTA's published decision or with your tax adviser
So, What Should You Do This Month?
The rule is live, so start with the highest-risk and highest-value suppliers, write the policy, and make sure every claim has a paper trail. Because the commentary we reviewed was based on summaries and an unofficial English translation, check the official text before finalising your procedures.
Want Your Supplier Records Ready for FTA Scrutiny?
Verification only helps if the evidence is organised and easy to find. Global Software helps UAE businesses set up Tally Prime, so supplier masters, purchase approvals, and VAT records sit together, ready for review.
Not sure your supplier records would stand up to an FTA check? Talk to Global Software and get your setup reviewed.
What Are the Most Common Questions About Supplier Verification?
What is FTA Decision No. 13 of 2026? It requires taxable persons to verify suppliers and supplies before deducting input VAT, under Article 54(bis). It took effect on 1 October 2026.
Are a valid TRN and tax invoice enough to claim input VAT? No. They're necessary but not sufficient. You also need supplier and transaction checks.
How often must I re-verify a supplier? At first dealing, and again if the supplier hasn't been verified in the previous 12 months.
Do small purchases need checks? Purchases below AED 10,000 (excluding VAT) may be exempt, subject to conditions. Not if that supplier's supplies exceed AED 100,000 over 12 months, past or expected.
What extra checks apply to high-value suppliers? Above AED 375,000 over 12 months: evidence of a UAE bank account and a review of public information.
Do I need a written policy? Yes. It must name who performs, reviews, and supervises the checks.
Will unchecked input VAT always be denied? Not automatically. Failure to verify can be treated as meeting the "should have known" test, so the risk is real. Confirm your position with the FTA's guidance or an adviser.
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