UAE Federal Tax Authority Issues Due Diligence Rules for Input VAT Claims

The UAE Federal Tax Authority has released Public Clarification VATP048, outlining due diligence procedures businesses must complete prior to claiming input VAT. Under Article 54 bis of the UAE VAT Law, tax authorities can reject VAT deductions linked to supply chain tax evasion. Companies are required to verify supplier details and repeat supplier onboarding evaluations at least once every 12 months.

Published November 14, 2026 Source: CLA Emirates

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Issuing authority: Federal Tax Authority
Jurisdiction: United Arab Emirates
Stage: Final rule
Official document: Public Clarification VATP048
Official source: www.timeoutdubai.com

Photo: CLA Emirates

The Federal Tax Authority (FTA) has issued Public Clarification VATP048, establishing mandatory due diligence standards that businesses must observe prior to claiming input VAT deductions, according to a report by CLA Emirates.

The clarification implements provisions under Article 54 bis of the UAE VAT Law. Under these rules, tax authorities are empowered to reject input VAT claims if transactions are determined to be connected with tax evasion within the supply chain.

To comply, businesses must verify the identity of suppliers, ensure suppliers hold registered operational addresses, assess the commercial rationality of transactions, and repeat onboarding evaluations at least once every 12 months.

According to the guidance, companies may be held liable if they knew or 'should have known' about illicit practices because of insufficient verification procedures. Commercial entities are advised to strengthen their procurement controls and accounts payable records to avoid VAT deduction rejections and penalties.