Make Tally Your ASP for UAE E-Invoicing
Namrata08 Sept 2026
When a supplier sends a tax invoice, the TRN looks right, and the amount matches the purchase order. For many finance teams, that has traditionally been most of the practical VAT check.
Quick Answer
From 1 October 2026, UAE businesses must do more than check a supplier’s TRN before claiming input VAT. They need documented supplier and transaction checks, including identity, business location, payment logic and commercial substance. Small invoices may be exempt, but aggregate supplier spend can still trigger verification requirements in practice.
From 1 October 2026, UAE businesses need to look further.
Federal Tax Authority Decision No. 13 of 2026 sets specific checks taxable persons must carry out on suppliers and the supplies they receive before deducting input VAT.
Issued on 22 July 2026, it gives practical effect to Article 54(bis) of the UAE VAT Law.
That Article allows the FTA to reject input VAT where a supply is connected to tax evasion and the taxable person knew, or should have known, about that connection.
A business now needs evidence showing it checked the commercial reality behind the invoice. Supplier onboarding is becoming part of VAT control, not just procurement administration.
Why VAT Supplier Verification Is Important
Article 54(bis) says a taxable person can be treated as having been required to know about a tax-evasion connection where it failed to verify the validity and integrity of supplies before deducting input tax in the way prescribed by the FTA.
Useful VAT evidence may therefore sit outside the invoice. It includes incorporation documents, identification, address checks, payment evidence or explanations for unusual transactions.
Supplier verification is required when dealing with a supplier for the first time and again where recurring dealings continue but the supplier has not been verified during the previous 12 months. Each taxable supply received or accepted must also go through the supply checks.
Two Levels of VAT Supplier Verification Checks
1. Supplier checks
The first level asks a simple question: is this supplier genuinely who they say they are?
For a natural-person supplier, the buyer must obtain valid identification, such as an Emirates ID or passport, and meet the supplier physically or virtually before the supply.
For a legal person, the buyer must verify incorporation through official databases, while also checking the identity of the director, agent or employee authorised to represent that supplier.
The buyer must also verify an actual place of business that fits the activity carried out.
Three named indicators need attention: the supplier changed address more than twice in the previous 12 months, changed key employees or relevant contacts more than twice, or carried out transactions that appear disproportionate or unexpected compared with the size and history of the business. If one applies, the buyer should retain a clear, justified explanation.
For larger relationships, extra checks apply. Where supplies from one supplier exceed AED 375,000 during the previous 12 months, or are expected to exceed that amount in the next 12 months, the buyer must obtain written confirmation from an authorised UAE bank that the supplier has a bank account. The buyer must also review reliable public information, including available reviews and media coverage, against the supplier’s nature and scale.
2. Supply checks
This level looks at the transaction itself.
The buyer must assess if the supplier has a genuine commercial reason to be involved and if the payment method and terms make commercial sense. If a third party is involved in payment, or payment goes to an account outside the supplier’s country of incorporation, there must be a reasonable commercial explanation.
Payment should generally be electronic. Cash can still be used where there is a documented commercial reason, it falls within applicable tax-law thresholds and it can be readily verified.
Businesses should also check if pricing or profit margins are commercially explainable, if the goods or services fit the supplier’s normal or licensed activity, and, for goods, if their authenticity, origin and the supplier’s ownership or right to dispose of them can be supported. If the supplier acts as an intermediary, its role should have a clear commercial reason.
The Exemption You Must Know
The measures may be disregarded where consideration for a taxable supply, excluding VAT, is less than AED 10,000.
But the invoice cannot be viewed alone. The exception does not apply where total supplies from the same supplier exceed AED 100,000 over the previous 12 months, or are expected to exceed AED 100,000 over the next 12 months.
Several invoices below AED 10,000 can therefore still bring the supplier relationship within the verification rules once the aggregate threshold is crossed.
That is an easy detail to miss. A small invoice does not always mean a small supplier relationship.
The Way UAE Businesses Should Act
Place the checks within normal purchasing rather than creating a separate tax exercise after invoices arrive.
- Track suppliers' spend against the AED 100,000 and AED 375,000 thresholds.
- Add identity, incorporation, authorised-person and address evidence to onboarding.
- Record the latest verification date and schedule a review once 12 months have passed.
- Build supply checks into purchase approval for unusual pricing, intermediaries, third-party payments and goods requiring origin evidence.
- Keep the evidence with a written internal policy showing who performs, reviews and supervises the checks.
The Decision expressly requires businesses to document verification steps, retain supporting records and maintain a policy setting out responsibilities and authority.
This is where the rule becomes quite practical. Your finance team may own the VAT return, but they cannot verify everything after the month has closed. Procurement may know why an intermediary was used. The purchasing team may have the trade licence.
Accounts payable can see where payment is going. Those pieces need to meet somewhere.
Conclusion
The new rules connect input VAT recovery more closely with the commercial substance of a purchase. A valid invoice still matters, but it now sits alongside evidence showing who the supplier is, where they operate, why the transaction makes sense and how payment was handled.
Before 1 October 2026, UAE businesses should make these checks part of routine procurement. When the commercial file and VAT file explain the same situation, the reasoning behind an input tax claim becomes easier to demonstrate.
Quick Answer
FAQs
- When do the new supplier verification rules start?
FTA Decision No. 13 of 2026 takes effect on 1 October 2026.
- Must every supplier be checked every year?
A supplier is checked at the first dealing and again if recurring dealings continue and no verification was completed during the previous 12 months.
- Are purchases below AED 10,000 exempt?
They may qualify where the supply is below AED 10,000 excluding VAT, unless the same supplier exceeds or is expected to exceed AED 100,000 over the relevant 12-month period.
- What should businesses retain?
Keep evidence of the checks, supporting documents, relevant commercial explanations and the written policy identifying who performs, reviews and supervises verification.
