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Co-Founder & CEO movingo
Editor
Author
Iakov Kukushkin
Copywriter, Journalist
𖡡 Dubai
⏱ 4 min read
Sept 09, 2026
The UAE Federal Tax Authority has set 1 October 2026 as the date its new supplier verification rules kick in — and from that date, holding a valid tax invoice will no longer automatically secure your input VAT deduction. In this article we will cover all the important details and dates so that you don't miss what changes, who is affected, and what to prepare before the deadline.
Key highlights
- A valid tax invoice is no longer enough on its own — you also need proof that you checked the supplier and the supply itself.
- There are two levels of checks: supplier verification and supply verification, with extra steps once a supplier crosses AED 375,000 in annual supplies.
- Supplies under AED 10,000 are exempt, unless the same supplier's total supplies to you pass AED 100,000 in 12 months.
- There is no fixed fine for skipping the checks — instead, the FTA can simply deny your input tax recovery.
- What is changing in UAE VAT input tax deduction from October 2026
- Why the effective date is confusing: January 2026 vs October 2026
- The two levels of VAT due diligence checks under FTA Decision No. 13 of 2026
- De minimis exemption for small VAT supplies in the UAE
- What happens if you do not comply with the new VAT due diligence rules
- How to prepare your business for the October 2026 VAT due diligence deadline
- Need help meeting the October 2026 VAT due diligence deadline?
- FAQ
What is changing in UAE VAT input tax deduction from October 2026
The Federal Tax Authority (FTA) issued Decision No. 13 of 2026 on 22 July 2026, taking effect on 1 October 2026. The law requires every VAT-registered business to actively check that its suppliers are legitimate and its supplies are genuine before claiming input tax back. Until now, most businesses treated a properly formatted tax invoice as sufficient proof to recover input VAT. However, starting 1 October 2026, this will no longer be the case.
In short, the burden of proof has shifted. It is not enough to simply receive a supply and pay VAT on it — you now need to document upfront that you have checked who you are buying from and that the transaction makes commercial sense.
Why the effective date is confusing: January 2026 vs October 2026
Two different dates show up in coverage of this change, and it is easy to mix them up.
- 📃 Federal Decree-Law No. 16 of 2025, which amended the VAT law, took effect on 1 January 2026.
It gave the FTA the legal power to deny input tax deductions where a supply was linked to tax evasion and the taxpayer was aware, or should have been aware, of it. However, the law did not specify what constitutes "should have been aware" — that is, what measures a business needs to take to ensure it is not turning a blind eye to such activities.
- 📃 FTA Decision No. 13 of 2026 fills that gap. It sets out the specific checks that count as reasonable due diligence, and it only applies from 1 October 2026.
So, for most of 2026, the FTA had the legal right to deny input tax on supplies linked to evasion, but the detailed rules for staying on the right side of this rule only became binding in October.
For a fuller picture of what changed across UAE Corporate Tax and VAT this year, see movingo's roundup of 2026 compliance updates.
Who needs to do VAT supplier due diligence in the UAE
The rule applies broadly. Every taxable person under VAT law, meaning any VAT-registered business or business required to register, must verify suppliers and supplies before deducting input tax. There is no exemption by company size, sector, or legal form.
☝️ What does change is how deep the checks need to go:
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Every taxable person must run the basic supplier and supply checks described below. - Businesses buying more than AED 375,000 a year from a single supplier must go further, adding bank confirmation and a reputational check.
- Very small, occasional purchases can fall under the de minimis exemption (see below) — but only within limits.
In practice, this affects anyone who claims input VAT, including importers, retailers, contractors, and service businesses that work with regular suppliers.
The two levels of VAT due diligence checks under FTA Decision No. 13 of 2026
FTA Decision No. 13 of 2026 splits the checks into two levels: verifying the supplier, and verifying the supply.
- 👨💼 Level 1 — Supplier verification. For every supplier, you need to confirm:
- Their identity — Emirates ID or passport for an individual, incorporation documents for a company.
- Their actual place of business, matching what they claim to do.
- Risk indicators, such as frequent changes of address or authorized representatives, or transaction volumes that do not match the supplier's size or history.
- Re-verification at least every 12 months for suppliers you keep working with.
- 📦 Level 2 — Supply verification. For every supply received, you need to be able to show:
- A genuine commercial reason for the transaction.
- Payment terms that make commercial sense, with electronic payment preferred over cash.
- Pricing and margins that are broadly in line with the market.
- The goods or services match what the supplier is actually licensed to provide.
Once the annual supply from one supplier exceeds AED 375,000, both levels receive an additional layer of verification: a bank account confirmation from a UAE bank and a basic reputation and media check on the supplier.
None of this should be improvised on a case-by-case basis. It works best as a standard onboarding step backed by a short written policy that specifies who in your business is responsible for conducting the checks and maintaining the records.
None of this should be improvised on a case-by-case basis. It works best as a standard onboarding step backed by a short written policy that specifies who in your business is responsible for conducting the checks and maintaining the records.
De minimis exemption for small VAT supplies in the UAE
Not every purchase needs the full checklist. Supplies where the value, excluding VAT, is under AED 10,000 are exempt from the verification requirements — a coffee run or a one-off stationery order does not need a supplier file. This is called the de minimis rule.
The catch is the annual cap: if your total supplies from the same supplier pass AED 100,000 over a rolling 12-month period, the exemption disappears and full verification applies to that supplier going forward, regardless of how small each individual invoice is. So the exemption protects small, occasional suppliers, not a supplier you quietly buy AED 500 worth of stock from every week.
What happens if you do not comply with the new VAT due diligence rules
FTA Decision No. 13 of 2026 does not impose a separate fine for skipping the checks. Instead, the consequences are outlined in Article 54 of the VAT law:
If you cannot prove that you performed the required verification, the FTA may consider you to be aware that a supply was linked to tax evasion and may deny your input tax deduction entirely.
That is a different, and potentially more expensive, risk than a standard late-payment penalty. A missed deadline costs a fixed fine; a failed due diligence check can mean losing the input tax recovery on the underlying transaction altogether, on top of whatever late-payment penalties already apply if the disallowed deduction changes your VAT position.
To avoid this, you need to have strict control over your accounting records and payment deadlines. Professional accounting assistance would be very helpful.
To avoid this, you need to have strict control over your accounting records and payment deadlines. Professional accounting assistance would be very helpful.
How to prepare your business for the October 2026 VAT due diligence deadline
With a few weeks left before the rules apply, the practical work is mostly about documentation and process, not new technology:
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Build a supplier file for every active supplier — identity documents, address confirmation, and a short note on why you use them. - Add the AED 375,000 check to your accounts payable process, so bank confirmation and reputational screening trigger automatically.
- Set a 12-month reminder to re-verify each supplier.
- Write a one-page policy naming who owns supplier verification internally.
- Review your payment terms — if you still pay key suppliers in cash, be ready to document the commercial reason.
We know this is one more compliance task on top of Corporate Tax, e-invoicing, and everything else landing in 2026. If you would rather hand it off, we can build your supplier verification file structure, set up the review calendar, and get your documentation ready before 1 October — so an FTA review is a formality, not a scramble.
Need help meeting the October 2026 VAT due diligence deadline?
Supplier verification requires clean, consistent records and knowledge of the rules. Once we set up the process, you won't have to reassemble supplier files under time pressure every quarter.
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Accounting: financial order for businesses and freelancers.
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Tax Advice: meeting deadlines, compliance, avoiding penalties.
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Bookkeeping: clean data, ready for verification and audit.
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FAQ
It is the decision that sets out the exact due diligence checks businesses must run on suppliers and supplies before deducting input VAT. It was issued on 22 July 2026 and takes effect on 1 October 2026.
Two changes matter here: Federal Decree-Law No. 16 of 2025 gave the FTA the power, from 1 January 2026, to deny input tax linked to tax evasion, and FTA Decision No. 13 of 2026 defines, from 1 October 2026, exactly what checks count as due diligence.
Yes, if you are registered for VAT and claim input tax, you will need to verify your suppliers according to the new rules. The only exception to this is the de minimis exemption for small and occasional supplies.
If you carried out and documented the required checks, your input tax recovery should stand. If you did not, the FTA can deny the deduction on the ground that you should have known about the link.
Yes, supplies valued under AED 10,000 are exempt under the de minimis rule, but the exemption stops applying once the total value of your supplies from the same supplier exceeds AED 100,000 in a year.
At onboarding, and then again at least every 12 months for suppliers you continue working with.
Cash payments are not banned, but the rules prefer electronic payments. If you pay in cash, you need a documented and genuine commercial reason for doing so in order to hold up to a due diligence check.
