Your supplier file changes on 1 October

• 26 August, 2026
• By Safwan, Managing Partner
• Tax Compliance

The supplier file now matters before you deduct VAT

Supplier checks become a VAT file requirement on 1 October 2026. The Federal Tax Authority Decision No. 13 of 2026, issued on 22 July, sets out measures before a taxable person deducts input tax. It does not say that a missed checklist item wipes out every input-tax claim. The real risk is narrower and sharper: if a supply sits in a tax-evasion chain, failure to verify can support the finding that you were required to know. The thresholds decide how far the checks go.

This is a new pre-deduction file, not a new VAT rate. The Federal Tax Authority decision is titled Measures, Procedures and Conditions required by Taxable Persons for the Verification of the Validity and Integrity of the Supplies before Deduction of Input Tax. It applies to supplies received before input tax is deducted, subject to the limited low-value relaxation in Article 6. The date that matters for purchasing teams is 1 October 2026.

The decision starts on 1 October, not 22 July

The decision was issued on 22 July 2026. It takes effect on 1 October 2026. Those are different dates, and a supplier file prepared for today’s return still needs to work for deductions made after the effective date.

The date is fixed.

From October, the question is not just whether an invoice exists. The taxable person must be able to show that the supplier and the supply were checked in line with the prescribed measures. That means procurement, finance and the person approving VAT returns need the same record, not three disconnected versions of it.

The AED 10,000 point is a limited relaxation

The first threshold is narrow.

AED 10,000 is not a general exemption from VAT records. It is the point below which the measures and conditions in this decision may be disregarded for the relevant taxable supply. The decision uses the words “less than” AED 10,000 for consideration excluding VAT. For a cash supply, Article 34(1) of Federal Decree-Law No. 8 of 2017 on Value Added Tax defines the value of the supply as the consideration less the tax. Article 34(2) sets a different valuation for non-cash or partly non-cash consideration. A supply of exactly AED 10,000 sits outside the relaxation on the published English wording, although the FTA PDF is an unofficial translation.

The AED 100,000 test removes the relaxation

The next test looks at the supplier relationship over time. If the total value of supplies received from one supplier exceeds AED 100,000 over the previous 12 months, or is expected to exceed AED 100,000 over the next 12 months, the AED 10,000 relaxation no longer applies. The decision says 12 months. It does not say calendar months.

This is a rolling test.

Example: Al Noor Fit-Out LLC receives taxable supplies from Gulf Line Trading for AED 8,500 on 5 October 2026, AED 42,000 on 20 October and AED 60,000 on 10 November. The consideration excluding VAT is AED 8,500 + AED 42,000 + AED 60,000 = AED 110,500. Before deducting input tax on the AED 8,500 supply on 6 October, the business records no prior supplies from Gulf Line and expects its next 12 months of purchases from the supplier to remain below AED 100,000. On those facts, the Article 6 relaxation is the relevant route for that deduction. The later receipts bring the total above AED 100,000, but that later actual crossing does not by itself establish that the 6 October deduction lost the relaxation. Test each later deduction using the supplier total and forecast recorded when that deduction is made. If a further AED 270,000 arrives on 15 February 2027, the total becomes AED 380,500, which exceeds AED 375,000. The additional supplier checks apply to a deduction for which the previous or expected next 12-month test is met.

A small invoice cannot be considered in isolation once the supplier total has crossed that line. The file should therefore track the supplier total, the period used and whether the next 12 months are expected to take the total over the threshold. Use the same basis for recurring purchases, rather than asking the buyer to decide the threshold afresh for every invoice.

AED 375,000 adds bank and reputation checks

A supplier total that exceeds AED 375,000 over the previous 12 months, or is expected to exceed it over the next 12 months, brings a second layer of work. The taxable person must verify that the supplier has a bank account and obtain from the supplier a written confirmation issued by an authorised bank in the State confirming that the supplier has a bank account. The confirmation must not contain any relevant reservations or conditions, and it is not required to be issued to the recipient.

This is the higher bar.

The same trigger also requires a review of client recommendations where available. Reliable public reviews and media coverage must be assessed for consistency with the supplier’s business and for indicators of suspected tax evasion. The common shorthand, ‘over AED 375,000 means get the bank letter’, misses half the obligation.

The decision uses “exceeds” for the AED 100,000 and AED 375,000 tests. Do not rewrite those thresholds as an ‘equal to or above’ test in an internal policy without a legal basis. That wording matters when a supplier sits exactly on a line.

The mistake we see most is treating an invoice as evidence

The mistake we see most is treating a valid tax invoice as the whole due-diligence file. Decision No. 13 asks for more than invoice shape. For a legal-person supplier, verify incorporation through an official database or obtain a certificate of incorporation. Check that the incorporation details match the entity’s name, address, employees and related information. Then verify the identity of the authorised director, agent or employee with valid proof of identity, including an Emirates ID or passport.

An actual place of business must also exist and be compatible with the supplier’s activities. That can be checked through appropriate electronic means or a field visit. For a natural-person supplier, obtain valid proof of identity and meet the supplier in person or virtually before the supply.

An invoice proves a document was issued. It does not by itself prove that the supplier exists, operates from the stated place or supplied what the business bought.

Every supply needs a commercial story

The decision also tests the transaction itself. Make a general assessment of the circumstances and ensure the supplier’s participation has a genuine commercial reason. Check that the price or profit margin is commercially justifiable and not significantly different from market conditions without a clear reason.

Commercial logic matters.

The circulating misreadings reverse the legal mechanism

The thresholds do not say that input VAT simply cannot be claimed. AED 10,000 is the low-value relaxation point for consideration excluding VAT on the supply received. AED 100,000 is the supplier-level 12-month point at which that relaxation stops applying. AED 375,000 is the supplier-level 12-month point that adds the bank confirmation, recommendations review and public-review and media assessment.

That is not what the decision says.

Missing one step is not, on its own, an automatic blanket denial of every input-tax amount. The decision creates a verification and evidence regime. It can change the FTA’s view of what a taxable person knew, or was required to know, if the underlying supply is connected with tax evasion.

The distinction is practical. A business with an incomplete file needs to repair the evidence and assess the transaction. It does not need to assume that every input VAT claim is already lost. A business that ignores obvious supplier and transaction risks is in a different position.

Article 54 bis is where rejection risk becomes real

The legal bridge is Article 54 bis of Federal Decree-Law No. 8 of 2017 on Value Added Tax, as amended. The FTA must reject recoverable input tax when it establishes that the supply was part of a supply or chain connected with tax evasion and the taxable person knew of that connection when deducting the input tax. It may reject the deduction where the connection is established and, having regard to the circumstances, the taxable person should have known.

The VAT Law goes further for the second case. A taxable person is deemed to have been required to know where it failed to verify the validity and integrity of received supplies before deducting input tax in accordance with the FTA’s prescribed measures, procedures and conditions. That is how a missed verification step can become evidence in a tax-evasion case. It is not a standalone automatic denial clause in Decision No. 13.

One point is genuinely unsettled: how “should have known” will be applied in practice. No published UAE decision currently interprets that wording. The safe position is to build a file that records the checks, the reason for any exception and the evidence available when the deduction was made. Businesses preparing for an FTA tax audit should treat this as part of their wider audit file, not a procurement note that disappears after payment.

Build the evidence file before October

Verification happens on first dealing with a supplier, or again for recurrent dealings if the supplier has not been verified during the previous 12 months. Every taxable supply received or accepted under the rules must be verified. The work needs an owner and a retention point.

Start with the supplier list.

1. Segment suppliers: record the consideration excluding VAT for each supply and the previous and expected next 12-month totals from each supplier.
2. Collect identity evidence: file incorporation or identity documents, authorised-representative evidence and the place-of-business check.
3. Record risk decisions: confirm that the supplier has not changed its address more than twice over the previous 12 months and has not changed its key employees, meaning its managers or those with whom you deal, more than twice over the previous 12 months. Also check for commercial transactions disproportionate or unexpected in volume, value or nature compared with the supplier’s size and business history. If an indicator applies, retain a clear and justified explanation, submit it to the FTA on request, and ensure it does not contradict available evidence.
4. Match the transaction: retain the contract, payment trail, commercial explanation, licence activity and, for goods, origin and ownership evidence.
5. Govern the process: name the people responsible for implementation, review and supervision, with their powers and responsibilities in a written policy.

Keep the supporting documents and records where the FTA can verify that the decision was implemented correctly. The retention setup should sit beside the company’s broader UAE tax record-keeping process, with an easy route from a VAT return line to its supplier evidence.

What to do today before the first October purchase

Do not wait for a supplier dispute. Pull the next 12 months of planned purchases, mark suppliers likely to exceed AED 100,000 and AED 375,000, and assign the first verification review. If the evidence is scattered, a VAT consultant in Dubai can turn the decision into a working checklist and a review file before the effective date.

The practical target is simple: when input tax is deducted after 1 October, your file should show why the supplier and the supply were accepted.

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