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Overview
What the decision requires
Since 1 October 2026, businesses must check that both the supplier and the supply are genuine before recovering input VAT on a purchase, and keep evidence that they did. The decision was issued under Article 54(bis) of the VAT Law and applies to all VAT-registered businesses, so purchases made from that date onwards are already in scope.
Scope
When the rules apply
| Situation | Requirement |
|---|---|
| Supply under AED 10,000 (excluding VAT) | Exempt |
| …but total supplies from that supplier exceed AED 100,000 in the last 12 months (or are expected to in the next 12) | Exemption lost; full checks apply |
| Total supplies from a supplier exceed AED 375,000 in the last 12 months (or are expected to in the next 12) | Extra bank and reputation checks |
| New supplier, or not verified in the last 12 months | Full supplier verification |
| Every taxable supply received | Supply verification |
Article 3
Supplier checks
Identity
- Individual: obtain a copy of a valid Emirates ID or passport, and meet the individual in person or virtually before the supply.
- Company: verify incorporation through official databases or a certificate of incorporation; the name, address and staff details must match. Obtain the ID of the authorised director, agent or representative.
Place of business
- Confirm an actual place of business exists, electronically or by site visit.
- Confirm the premises suit the supplier's activity.
Risk indicators
- More than two address changes in 12 months
- More than two key-staff changes in 12 months
- Transactions out of proportion to the supplier's size or history
If any indicator applies, keep a written justification and provide it to the FTA on request.
Bank confirmation
A letter from a UAE bank confirming, without reservation, that the supplier holds an account there. It need not be addressed to you.
Reputation review
An assessment of public reviews and media coverage, confirming they are consistent with the business and no signs of tax evasion.
Article 4
Supply checks
Commercial rationale
The transaction has a genuine business reason.
Payment
- Electronic payment is expected. Cash is acceptable only with a documented reason, within legal thresholds, and where it is easily verifiable.
- Third-party payments, or payments to an account outside the supplier's country of incorporation, need a reasonable explanation.
Pricing
Prices and margins are in line with the market, or the difference is explained.
Scope
Goods or services fall within the supplier's normal activity and trade licence.
Goods
Verify authenticity and origin, and that the supplier owns them or has the right to sell them.
Intermediaries
There is a clear commercial reason for the intermediary's role.
Article 5
Evidence to retain
Supplier file
ID copies, incorporation proof, place-of-business evidence, risk-indicator assessment and any justifications. For suppliers over AED 375,000, add the bank letter and the reviews and media assessment.
Per-supply records
Rationale, payment evidence, pricing check, licence-scope check, goods origin and ownership, and any intermediary explanation.
Verification log
A record of the steps taken, detailed enough for the FTA to audit.
Written policy
Names who implements, reviews and supervises the checks, with their powers and responsibilities. Keep it with your tax records.
How RSM can help
Building a verification framework that holds up
Standard Operating Procedure design
A tailored SOP setting out the measures, procedures and conditions your business needs to verify supplies before deducting input tax, built around your existing procurement and accounts payable processes.
Supplier verification templates
Ready-to-use templates, including Know Your Supplier forms and verification checklists, so your team collects and documents supplier information consistently.
Post-implementation review
Once procedures are in place, we review how they work in practice, identify gaps and recommend improvements to strengthen your input tax recovery position.
Responsibility for compliance and input tax recovery remains with the taxable person. Our role is to help you design and maintain a robust verification framework.
Contact us
Contact us
Reach our E-Invoicing team tax-inquiry@rsm.ae, or send us a message using the form below.
Reach our E-Invoicing team tax-inquiry@rsm.ae, or send us a message using the form below.