Businesses in the UAE have been required to maintain proper records to support their VAT claims since the tax was introduced in 2018. As of 1 October 2026, these responsibilities have expanded significantly, with new rules requiring businesses to verify their suppliers and examine the transactions behind their input VAT deductions.
The changes are set out in Federal Tax Authority (FTA) Decision No. 13 of 2026. They introduce specific checks that businesses must carry out and document before recovering input VAT, which is the VAT paid on purchases used for their taxable business activities.
What businesses must verify: TRN verification UAE and verify VAT number
For many UAE businesses, checking a new supplier already involves obtaining a trade licence and confirming basic company details. Under the new Know Your Supplier (KYS) requirements, those checks need to go further. Businesses must establish that the supplier is genuine, that the person dealing with them is authorised to do so and that the supplier has a real business presence consistent with its activities.
Documents to obtain:
- Valid licence
- TRN certificate (to complete TRN verification UAE)
- Knowing if they are a VAT registered supplier
- IBAN/Bank Account confirmation letter issued by the bank
- Identity document of the authorised representative of the company i.e. Emirates ID
- Proof of Address (Ejari)
The requirements also apply to individuals supplying goods or services, whose identity must be verified and who must be met either in person or virtually before the supply takes place, this virtual or in-person meeting requirement represents a significant operational shift for procurement teams. Checks are required when a supplier is first engaged and again if no verification has been carried out during the previous 12 months. Previously, holding a valid tax invoice was sufficient enough to support the recovery of the 5% input tax recovery VAT paid to suppliers. This has changed and needs a significant amount of supporting evidence now.
There is also an expectation that businesses pay attention to anything unusual about a supplier. A company that repeatedly changes its address or key personnel, for example, may warrant closer examination, particularly if its transactions seem out of keeping with the size of its operations. The FTA expects businesses to record an explanation where these warning signs arise.
Larger supplier relationships bring additional requirements. Where purchases from a supplier exceed, or are expected to exceed, AED 375,000 over 12 months, businesses must also obtain evidence of a UAE bank account and review publicly available information about the supplier’s reputation.
It’s worth mentioning that VAT compliance does not stop at supplier verification. Businesses must also look at the individual transactions themselves before deducting the associated input VAT.
A company may have dealt with a supplier for years without any problems, but an unusual payment request could still raise questions. If the supplier suddenly asks to be paid through an unrelated third party, for example, the business needs to understand why. Cash payments and payments to accounts outside the supplier’s country of incorporation can also call for further explanation.
The FTA also expects businesses to consider whether the transaction makes commercial sense. That includes looking at whether the goods or services are consistent with the supplier’s usual activities, whether the price is reasonable and, where goods are involved, their ownership and origin. If an intermediary is part of the arrangement, there should be a commercial reason for its involvement.
The point is to establish that the transaction is genuine and that any unusual arrangements can be explained and supported by evidence.
When smaller purchases are exempt
While the new requirements introduce more detailed checks, the rules do recognise that smaller purchases may not warrant the same level of verification. Certain supplies valued below AED 10,000, excluding VAT, can qualify for an exception, subject to the conditions as laid out by FTA.
Of course, a business might make dozens of small purchases from the same supplier over the course of a year. That’s why the exception no longer applies once the total value of supplies from that supplier exceeds AED 100,000 over the previous 12 months, or is expected to exceed that amount over the following 12 months.
The distinction is useful because it allows businesses to treat occasional low-value purchases differently from regular supplier relationships involving larger amounts.
Keeping the right records for your registered business credibility
Of course, carrying out these checks is one thing. Being able to show the FTA what was checked, and when, is another.
For many businesses, the information needed will already be held across different departments. Procurement may have the supplier’s trade license and company details, while the finance team holds invoices and payment records. The people preparing the VAT return may not have access to everything needed to demonstrate that the checks were completed.
Under the decision, businesses must document their verification procedures and retain the evidence supporting them, including explanations for any unusual circumstances identified. They must also maintain a written internal policy setting out who is responsible for carrying out the checks, who reviews them and who supervises the process.
For a business with an established supplier approval system, this may mean adapting existing procedures rather than introducing an entirely separate process. The important thing is that the necessary checks take place and can be demonstrated when the FTA portal asks for the records.
It is required for businesses to note any changes in suppliers business information including changes in management, ownership structures, trade activities and registered business address.
What this means for VAT recovery
The reason for these requirements lies in Article 54 bis of the UAE VAT Law, which deals with input VAT deductions involving supplies connected to tax evasion.
Under that provision, the FTA may refuse a deduction where the relevant legal conditions are met, including circumstances in which a business knew, or should reasonably have known, that a supply was connected to tax evasion as the burden of proof has effectively been shifted to the taxpayer.
It’s important to distinguish between a failure to complete a verification procedure and a finding that tax evasion has occurred. One does not automatically establish the other. But if the FTA questions a deduction, a business that has kept proper records of its supplier and taxable transaction checks will be in a better position to explain what it knew about the supply.
The decision has been in effect since 1 October 2026, so businesses should already be applying these procedures to relevant business purchases. For those reviewing their arrangements, a sensible starting point is to look at how suppliers are approved, when their details are checked again and whether the necessary information reaches the people responsible for VAT reporting.
