UAE VAT Supplier Due Diligence: A Practical 2026 Guide

UAE VAT supplier due diligence means checking who you buy from, whether the purchase is genuine and whether the payment makes commercial sense before claiming input VAT. FTA Decision No. 13 of 2026 sets out these checks from 1 October 2026. It is not enough simply to file an invoice and assume the verification work is complete.

This guide explains the rules in the order a business normally makes a purchase: identify the supplier, assess the transaction, check payment, keep evidence and review the VAT claim. It covers the small-purchase exception, higher-value supplier checks and practical examples. Examples are hypothetical; suggested internal controls are identified separately from legal requirements.

1. What is input VAT, and why do supplier checks matter?

Input VAT is VAT paid or payable on goods, services or imports you receive. Recovering it generally means deducting eligible input tax in your VAT return; this does not necessarily mean receiving a cash refund. Whether a particular cost qualifies still depends on the applicable VAT rules.

Simple illustration: assume an eligible business purchase costs AED 20,000 plus AED 1,000 VAT. That AED 1,000 is input VAT. Posting the invoice records the purchase in your accounts, but does not by itself establish that the tax is recoverable or that the supplier checks were performed.

The risk behind the checks is explained in FTA clarification VATP046, pages 9–10. Under Article 54(bis), recovery will be rejected where the FTA establishes that a supply was part of a tax-evasion-linked supply or chain and the customer knew of that connection. The FTA may reject recovery where the customer should have known from the circumstances.

Failure to verify supplies before deduction engages the provision deeming the customer required to have been aware. The supply chain is not limited to the customer's direct supplier. This makes verification important, but it does not mean that every missing document automatically cancels every VAT claim. Obtain qualified advice on incomplete or disputed cases.

2. Who must follow Decision 13, and from when?

The decision applies to taxable persons: people or entities registered or required to register under VAT law, when verifying supplies received before deducting input tax for Article 54(bis) purposes. It is not limited to large companies or trading businesses; purchases of services also need consideration.

The decision was issued on 22 July 2026 and became effective on 1 October 2026. Its supplier checks, transaction checks, procedures and exception should be read together. A small-supply exception is not an exemption from VAT itself. See Decision 13, Articles 1–2 and 7.

3. Understand the three spending tests before approving a supplier

These amounts answer different questions. Apply them to the relevant supply and supplier, not to your company's total turnover. The supplier tests look backwards and forwards over 12 months; they do not reset automatically on 1 January.

Below AED 10,000: could this supply qualify for the exception?

Article 6 permits the decision's measures and conditions to be disregarded for a taxable supply where the consideration, excluding VAT, is less than AED 10,000. Exactly AED 10,000 is not below the limit. Other VAT recovery and documentation rules still apply.

Above AED 100,000: does repeat business remove that exception?

The exception is unavailable if total supplies from the same supplier exceed AED 100,000 over the previous 12 months, or are expected to exceed it over the next 12 months. Check both periods, rather than looking only at the current invoice.

Example: an AED 8,000 VAT-exclusive one-off purchase may fall within the exception if neither supplier-total test exceeds AED 100,000. The same AED 8,000 purchase does not qualify if that supplier's preceding-12-month supplies total AED 120,000. Small invoices do not override the supplier-total rule.

Above AED 375,000: are enhanced supplier checks required?

Article 3(4) adds bank-confirmation and public-information checks where supplies from the supplier exceed AED 375,000 in the previous 12 months or are expected to exceed it in the next 12 months.

Forecast example: planned purchases of AED 32,000 monthly total AED 384,000 over 12 months, crossing the forward test. AED 30,000 monthly totals AED 360,000 and does not cross that forward test; still check past purchases and all other applicable requirements.

The aggregate tests say exceeds, not “at or above”. Only the AED 10,000 clause expressly states VAT-exclusive consideration; do not assume it resolves the tax basis of every other threshold. Document the basis used and seek advice where the distinction affects the result. These supplier tests are not your VAT-registration calculation. See Articles 3(4) and 6.

4. Identify the supplier and the person representing it

Start by distinguishing an individual from a company or other legal entity. A trading name on an invoice does not answer that question.

• Individual supplier: obtain a copy of valid identification, such as an Emirates ID or passport, and meet the supplier in person or virtually before the supply.
• Company or other legal entity: verify incorporation through official databases or obtain an incorporation certificate. Check that the details are valid and match the entity's name, address, employees and relevant information.
• Authorised representative: obtain a copy of valid identification, such as an Emirates ID or passport, for the director, agent or employee authorised to represent the legal entity.

Practical application: compare the quotation, contract and invoice against the verified legal identity. Investigate unexplained differences rather than opening duplicate supplier accounts. If a supplier charges UAE VAT, checking its tax-registration details is also a useful VAT control, but that check alone does not replace Article 3 identity verification.

Keep identity copies in restricted storage with appropriate access controls. A supplier tracker should refer to the secure file, not expose passport or Emirates ID images to everyone. These storage arrangements are practical safeguards, not a new document list imposed by this article. Source: Article 3(1).

5. Confirm the supplier actually operates from suitable premises

Article 3(2) requires verification of an actual business location and whether it is compatible with the supplier's activities. Appropriate electronic checks or a field visit can be used; the decision does not require a physical visit in every case.

Example: for an equipment supplier, establish how its stated business location fits its operations. If an address or operating arrangement seems inconsistent, request an explanation and supporting evidence. Do not decide that a supplier is fraudulent merely because its arrangements differ from yours.

A practical record notes the address, method and date of verification, evidence reviewed and any unresolved questions. A map pin alone may not answer whether the business genuinely operates there.

6. Investigate risk indicators instead of just ticking “approved”

Article 3(3) identifies three types of concern:

• The supplier changed its address more than twice in the preceding 12 months.
• Its key employees—managers or the people you deal with—changed more than twice in that period.
• Transactions are unexpectedly large or different in volume, value or nature compared with the supplier's business size and history.

Where an indicator applies, retain a clear, justified explanation consistent with available evidence, ready for the FTA if requested. A risk indicator is a reason to investigate, not an automatic accusation or ban on trading.

Example: three address changes require explanation. A documented operational relocation may explain the pattern, but an unsupported verbal assurance does not resolve conflicting documents. Record the concern, explanation, evidence and reviewer conclusion. See Article 3(3).

7. Check that each purchase has a genuine commercial explanation

Supplier onboarding is only half the process. Article 4 also requires checks on the supply itself: transaction conditions, genuine commercial reasons, defensible pricing or margins, and whether the goods or services fit the supplier's ordinary or licensed activities.

For goods, verify authenticity, origin and the supplier's ownership or right to dispose of them. If an intermediary is involved, understand its role and the commercial reason for using it.

Practical goods example: link the quotation and purchase order to delivery records, quantities received, invoice and payment. Obtain evidence appropriate to origin and the supplier's right to sell the goods. A delivery note alone may not establish every required point.

Practical services example: keep the agreed scope, deliverables, completion evidence and acceptance record. Explain what was actually supplied, not merely that an invoice says “consultancy”. These are suggested evidence types, not an exhaustive statutory checklist.

An unusually low price may have a genuine explanation, such as a documented commercial discount. Record why it makes sense instead of inventing a market comparison. Source: Article 4(1) and 4(3).

8. Review electronic payments, cash and third-party accounts

Payment is to be made electronically. Under Article 4(2), payment terms and methods must be commercially justifiable. Cash requires a documented commercial reason, compliance with thresholds in applicable tax legislation and an easily verifiable payment trail. Decision 13 does not itself give one universal numerical cash cap.

A third party making or receiving payment, or a bank account outside the supplier's country of incorporation, requires a reasonable commercial explanation consistent with available evidence. Neither arrangement should be accepted without understanding the reason.

Example: a supplier asks you to pay another company. Request the relationship, contractual basis and supporting payment instructions; reconcile the explanation to your documents. Simply receiving an email saying “pay this account” does not establish the commercial rationale.

Suggested fraud control: independently verify bank-detail changes through an established contact route and have a second person review exceptions. Link payment references to the correct supplier and invoice. These controls help, but do not replace the decision's conditions. Source: Article 4(2).

9. Complete the additional checks for higher-value suppliers

When the AED 375,000 past-or-expected-future supplier test is exceeded, obtain written confirmation issued by an authorised UAE bank that the supplier has a bank account, without relevant reservations or conditions. The confirmation need not be addressed specifically to your company.

An IBAN in a supplier's email or on its invoice is not the same as bank-issued confirmation. Check the issuer and what the document actually confirms.

Also review and assess available public reviews and media coverage from reliable sources. Consider whether the information fits the nature and size of the supplier's business and whether suspected tax-evasion indicators exist. Keep a dated assessment; do not treat an unverified online complaint as established wrongdoing. Source: Article 3(4).

10. Decide who checks, who reviews and when to repeat the work

Article 5 requires supplier verification at first dealings and, for repeat dealings, where verification has not happened during the preceding 12 months. Each applicable taxable supply must also be checked under Article 4. One onboarding approval is not permission to ignore later unusual transactions.

Document the steps, retain supporting records and maintain a written policy naming the people responsible for implementation, review and supervision, with clear powers and responsibilities. Keep that policy with the designated records.

A suggested allocation: purchasing collects supplier evidence; operations confirms receipt or completion; finance reconciles records and reviews VAT treatment; a named reviewer resolves exceptions. These are practical job allocations, not roles prescribed by the decision.

Use a tracker showing supplier identity, last verification date, preceding and forecast 12-month totals, evidence locations, exceptions, reviewer and next review. The decision does not create a standalone numerical retention period; confirm the record-keeping rules applicable to your circumstances. See Article 5.

Putting it together: a purchase from request to VAT review

Hypothetical case: your business plans AED 32,000 monthly purchases from a new supplier. The expected 12-month total is AED 384,000, so the higher-value checks apply without waiting for actual spending to catch up.

1. Before onboarding: verify the legal entity, representative, premises and relevant risk indicators; obtain the additional bank confirmation and public-information review.
2. Before accepting the purchase: assess the commercial rationale, licensed activities, price and relevant goods or services evidence.
3. Before payment: confirm that payment arrangements are commercially justified and document any exceptions.
4. Before deducting input VAT: reconcile the evidence and review both supplier verification and the ordinary recovery conditions.
5. Afterwards: retain the file, track further purchases and schedule supplier reverification while continuing transaction-level checks.

If evidence is missing, record the precise gap, request the appropriate document or explanation and obtain tax review before treating verification as complete. Do not fabricate evidence, backdate approvals or automatically amend a return without reviewing the facts. If VAT was already claimed, ask your adviser whether corrective action is required.

Frequently asked questions

Is a valid tax invoice enough?

No. It is one part of the evidence. Supplier and transaction verification, expense eligibility and other applicable recovery conditions still need consideration.

Do established suppliers need checking again?

Yes. Article 5 covers repeat dealings where no supplier verification occurred in the preceding 12 months. Continue the applicable checks for individual supplies as well.

Must we visit every supplier's office?

No. Article 3(2) permits appropriate electronic means or a field visit. Your evidence must address the actual location and whether it suits the business.

Can we split purchases into invoices below AED 10,000?

Small invoices do not bypass the supplier-total test. Article 6 concerns the supply's consideration and the past-or-expected-future AED 100,000 supplier test, not a general permission to avoid verification by splitting paperwork.

Does completing the checklist guarantee VAT recovery?

No. It cannot make an ineligible expense recoverable or guarantee the FTA's conclusion. Escalate contradictory evidence and obtain advice on your facts.

Does this also apply to imported goods or services?

The decision defines input tax to include imports and describes its scope in terms of supplies received. Cross-border cases can involve additional documentation and VAT rules. Do not assume either a blanket exemption or an identical domestic document pack; obtain case-specific review.

How BWMC can help organise the work

BWMC can discuss a scoped review of supplier files, purchase reconciliations, verification responsibilities and VAT preparation. If supplier totals or documents are incomplete, start with accounting and bookkeeping support; for the tax review, explore our VAT accounting services.

Contact BWMC to discuss a supplier-verification review. Share the period and issues first; arrange a secure channel before providing identity or sensitive financial documents.

Official sources and important limitations

• FTA Decision No. 13 of 2026: Articles 1–7; supplier checks, supplies, procedures, exception and commencement.
• FTA Public Clarification VATP046: pages 9–10 explain Article 54(bis) and the tax-evasion-linked recovery rules.

Checked on 16 October 2026. This guide explains Decision 13; it is not a complete manual for every UAE VAT obligation or a transaction-specific opinion. The FTA-hosted English decision is an unofficial translation. Obtain qualified review of the Arabic text and current legislation where interpretation is disputed. No completed professional review or guaranteed outcome is implied.