UAE Input VAT Verification Rules from 1 October 2026: What to Check Before You Claim

From 1 October 2026, a valid tax invoice is no longer enough to recover input VAT in the UAE. Under Federal Tax Authority Decision No. 13 of 2026, a VAT-registered business must verify each supplier and each purchase before it deducts the VAT, keep evidence of the checks, and have a written policy naming who does them. If it does not, and the supply turns out to be part of a chain connected to tax evasion, the FTA can deny the input VAT on the basis that the business should have known. The checks are new work for finance and procurement teams, and the first VAT returns that include October 2026 purchases will be the first to be tested.

Why the rules exist: Article 54(bis)

Article 54(bis) lets the FTA refuse input VAT where a supply, or the chain of supplies it belongs to, is connected with tax evasion. The test has two levels.

The decision fills in the second line. A business that did not carry out the prescribed verification before deducting is treated as one that should have known. So the checks are not a formality: they are the evidence that protects the deduction if a supplier further up the chain turns out to be a missing trader.

Check one: the supplier

Verify the supplier the first time you deal with it, and again if it has not been verified in the previous 12 months.

• Identity. For an individual, a copy of a valid Emirates ID or passport, and a meeting in person or by video before the supply. For a company, confirmation of incorporation from an official database or the certificate of incorporation, checked against its name and address, and the ID of the director, agent or employee who represents it.
• Place of business. Confirm that the supplier has a real place of business, by electronic means or a site visit, and that it fits what the supplier says it does. A trading company supplying containers of electronics from a shared desk is a mismatch to explain.
• Risk indicators. A change of address more than twice in 12 months, a change of key people more than twice in 12 months, or transactions out of proportion to the supplier’s size and history. If any applies, document why you are still comfortable dealing with it.
• Enhanced checks above AED 375,000. Where supplies from one supplier exceed, or are expected to exceed, AED 375,000 over 12 months, obtain written confirmation from a UAE bank that the supplier holds an account, and review public information such as media coverage and reviews.

Check two: each supply

Before deducting the VAT on a purchase, the business should be able to answer these questions from its own records.

The small-purchase exception, and its trap

A purchase under AED 10,000 excluding VAT can be left out of the verification. But the exception falls away for a supplier whose total supplies to you exceed, or are expected to exceed, AED 100,000 over 12 months. A business with many small invoices from the same vendor therefore needs to track the running total per supplier, not just the value of each invoice.

Documents and the written policy

Keep the evidence of each step with the VAT records, in a form the FTA can review. UAE VAT records are generally kept for five years after the end of the tax period, and longer for some capital assets. The decision also requires a written policy that names the people who carry out, review and supervise the checks, with their powers and responsibilities. An auditor or an FTA officer will usually ask for the policy first.

Where Indian-owned UAE companies are exposed

• Trading companies in electronics, metals, mobile phones and similar goods, where missing-trader chains are most common, should expect the closest scrutiny.
• Supplier onboarding run from India. Many Dubai companies of Indian groups have their vendor master and payments managed by the Indian finance team. The checks must still meet the UAE standard, including the site or virtual verification of the supplier’s premises.
• Payments routed through India. A UAE supplier paid from an Indian account, or asking to be paid to an account in another country, is a payment arrangement the decision asks you to justify.
• Related-party suppliers. Group companies are suppliers too. The checks are quick for them, but they still need to be documented.

A five-step plan

1. Rank suppliers by 12-month spend and mark those above AED 100,000 and AED 375,000.
2. Add the supplier checks to onboarding, so no new vendor is paid before they are done, and diarise annual re-verification.
3. Add the supply questions to invoice approval, with a short checklist the approver signs off.
4. Write and approve the policy, naming the people responsible.
5. Review the October 2026 purchases before the first affected VAT return is filed, and hold back input VAT on any purchase that cannot yet be supported.

The structured data that the UAE’s e-invoicing system will carry from 2027 makes some of these checks easier to evidence; see UAE e-invoicing deadlines. For the corporate tax calendar, see UAE corporate tax return deadlines and penalties.

Our UAE VAT team drafts verification policies, reviews supplier files and helps businesses defend input VAT claims.

Written by Vijay Dhawan, Managing Partner, LexVerge LLP. This article is general information, not tax or legal advice. Rates, thresholds and form numbers change; confirm the current position for your facts before acting.