UAE Mandates Supplier and Transaction Due Diligence for VAT Input Tax Recovery

The UAE Federal Tax Authority has issued Decision No. 13 of 2026, establishing mandatory supplier verification rules under Article 54(bis) of the UAE VAT Law. Taxable businesses must verify supplier identities, licenses, signatories, and premises before claiming input tax deductions. The FTA may disallow deductions if transactions are tied to tax evasion under a 'knew or should have known' standard.

Published October 30, 2026 Source: Consultancy-me.com

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Issuing authority: Federal Tax Authority
Jurisdiction: United Arab Emirates
Stage: Final rule
Official document: Decision No. 13 of 2026
Official source: www.consultancy-me.com

Photo: Consultancy-me.com

The UAE Federal Tax Authority (FTA) has issued Decision No. 13 of 2026, introducing mandatory supplier and transaction verification rules for businesses seeking to recover value-added tax (VAT) in the UAE.

Under Article 54(bis) of the UAE VAT Law, taxable entities are required to verify supplier identities, commercial trade licenses, authorized signatories, and physical business locations prior to claiming input VAT deductions. Businesses must conduct these checks on new suppliers upon their first engagement and re-audit existing vendors if no verification took place during the preceding 12 months.

Taxpayers are also required to substantiate the authentic commercial rationale, profit margins, and licensed operational scope of each transaction. The FTA is empowered to disallow input VAT deductions under a 'knew or should have known' legal standard if transactions are found to be connected to tax evasion.