Since 1 October, you have to check your suppliers before you claim VAT back.
FTA Decision 13 of 2026 is in force. A VAT registered business now has to verify who its suppliers are, and keep a written policy saying who does the checking, or the Federal Tax Authority can refuse to let it deduct the VAT it paid them.
A new rule on VAT recovery took effect on 1 October. Federal Tax Authority Decision No. 13 of 2026 sets out the checks a business must make on its suppliers before it deducts the VAT it paid them, which the law calls input tax. The decision gives effect to Article 54 bis of the VAT law, Federal Decree-Law No. 8 of 2017, a provision inserted by Federal Decree-Law No. 16 of 2025 with effect from 1 January 2026. That article lets the authority refuse the deduction where a supply is linked to tax evasion and the business knew or should have known. A business that skipped the checks is treated as if it knew. A business that did them and kept the record is not.
The checks come in two layers. The first is about the supplier and is done at the first transaction and then once every twelve months. A business must confirm the supplier's identity and registration against official records, confirm who is authorised to act for it, and confirm, online or by a site visit, that it has a real place of business consistent with what it does. If the supplier is an individual, such as a freelancer, the business has to meet them, in person or on a call, and keep a copy of their Emirates ID or passport before the first supply. It must also watch for warning signs: a supplier that changed its address or key staff more than twice in twelve months, or whose transactions look out of proportion to its size. For a supplier a business buys more than AED 375,000 from in a year, two more steps apply, a written confirmation of the supplier's UAE bank account and a review of publicly available information about the supplier.
The second layer is about each supply. The business should be able to show that there was a genuine commercial reason for the supplier's involvement. The price and margin should look reasonable against the market. The goods or services should match what the supplier is licensed to do, and the goods should have been the supplier's to sell. If there was a middleman in the chain, it should be clear what they were for. Payment is checked too. Cash, payment to a third party, and payment to an account outside the supplier's home country all need a documented commercial reason.
Small purchases are carved out. A supply under AED 10,000 excluding VAT can be left out of the detailed checks. The carve-out stops once a single supplier's total reaches, or is expected to reach, AED 100,000 in twelve months, at which point every invoice from that supplier is in scope.
The decision also requires a written internal policy. It has to name who performs the checks, who reviews them and who supervises compliance. The policy and the supplier records are what the authority will ask for in an audit.
For most founders the scope is narrower than the text suggests. The rule only touches businesses registered for VAT, which is mandatory once taxable supplies pass AED 375,000 a year and voluntary from AED 187,500. A company with a handful of regular suppliers can meet it with a one-page policy and a folder per supplier. The folder holds a copy of the trade licence, the ID of the person who signs, the address, a screenshot of the TRN check on the FTA's EmaraTax portal, and a bank letter for the large ones. Most of that is the same file a bank asks for when it opens an account.
The cost of ignoring it is specific. The deduction on a purchase is the VAT the business already paid, so a refused deduction is money spent twice. Build the supplier file at onboarding, when the supplier is motivated to hand over documents, and date it, because the annual review has to show it was repeated.