From 1 October 2026, FTA Decision No. 13 requires UAE businesses to verify suppliers and transactions before recovering input VAT — a valid tax invoice alone is no longer sufficient. What the rules require, the AED 10,000/100,000/375,000 thresholds, and what it means for procurement and AP going forward.
From Thursday, 1 October 2026, UAE taxable persons must perform and document specific supplier and transaction checks before deducting input VAT. The requirement comes from Federal Tax Authority (FTA) Decision No. 13 of 2026, issued on 22 July 2026, which gives operational content to Article 54 bis of the VAT Law — a provision inserted by Federal Decree-Law No. 16 of 2025 and in force since 1 January 2026.
The practical shift: input VAT recovery has always required a valid tax invoice. It now also requires an evidence file showing a business knew who it was dealing with and that the deal made commercial sense.
Article 54 bis lets the FTA deny input VAT where a supply, or any link in its supply chain, is connected to tax evasion and the recipient either knew of that connection — denial is then mandatory — or should have known, in which case denial is discretionary.
Decision No. 13 defines what “should have known” means in practice: a business that has not carried out the prescribed verification is treated as having been required to be aware. Skipping the checks removes the “we had no way of knowing” defence.
Two points worth stating plainly: failing the checks is not an allegation of evasion — it goes only to whether a claim can be defended if evasion exists somewhere in the chain. And the rule bites only where evasion is actually present in the chain, but a business will not control whether it is, which is exactly why the file matters.
Completed the first time a business deals with a supplier and repeated at least every 12 months.
Before deducting input VAT, a business must be able to show:
| Level | Trigger (rolling 12 months) | What applies |
|---|---|---|
| Limited exception | Individual supply below AED 10,000 (excl. VAT) | Not required — unless cumulative purchases from that supplier exceed AED 100,000 |
| Standard | AED 10,000 – 375,000 | Full supplier and transaction due diligence |
| Enhanced | Above AED 375,000 | Standard checks plus written UAE bank account confirmation and a review of public information and supplier reputation |
The AED 10,000 exception is tested per individual supply, not on total annual purchases. A vendor bought from repeatedly in small amounts can still lose the exception once cumulative spend crosses AED 100,000. The AED 375,000 enhanced-tier trigger is forward-looking as well as historical: it applies if a supplier’s transactions exceeded that amount over the past 12 months, or are expected to over the next 12.
Procurement and finance can no longer treat supplier setup as an administrative step. A vendor file is now part of a business’s VAT position.
Every active vendor above the exception needs a verification file. Expect a backfill exercise prioritised by spend — enhanced-tier suppliers first, then standard, then the long tail.
Because the AED 100,000 and AED 375,000 triggers look forward as well as back, spreadsheets will struggle. ERP or AP tooling should flag a vendor crossing a threshold before the invoice is claimed, not after.
Cash payments, third-party settlements and offshore transfers each need a written justification. Businesses with agent-based payments — trading, logistics, construction — should review their patterns first.
Verification decays after 12 months. Someone needs to own the calendar, not just the initial rollout.
Where a supplier sits between a business and the real source of supply, a commercial explanation for its role is required. Long or opaque chains carry more risk.
Denied input VAT is a direct hit to margin and can come with reassessment and penalties. Because the Decision applies at the point of deduction, gaps found in an audit are difficult to fix retroactively.
The operator’s view. This Decision doesn’t change the VAT rate or who can claim — it changes what a business must be able to prove when it does. Businesses that fold supplier due diligence into existing procurement and accounts-payable workflows will absorb this quietly. Those that treat it as a one-off compliance exercise before 1 October, without a system for the ongoing 12-month refresh and threshold monitoring, will find themselves exposed again within a year. Documentation retained alongside the invoice — not diligence performed but unrecorded — is what actually protects a claim at audit.
This article is for general information only and does not constitute tax or legal advice. OM4Biz is not a licensed tax adviser. Application depends on each business’s facts; consult a qualified VAT adviser and refer to the FTA’s published text of Decision No. 13 of 2026 before acting.