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UAE Issues Clarification on Mandatory Verification for VAT Input Tax Deductions

The UAE Federal Tax Authority issued a public clarification establishing mandatory verification procedures for input VAT deductions. Taxable entities must review supplier status, operational substance, commercial rationale, and payment structures before claiming recovery. Failing to maintain documented due diligence enables the authority to disallow deductions.

Issuing authority
Federal Tax Authority
Jurisdiction
United Arab Emirates
Publication date
November 11, 2026
Stage
Final rule
Official document
Public Clarification on Verification of the Validity and Integrity of the Supplies before Deduction of Input Tax
Official source
tax.gov.ae
Illustration: A modern corporate accounting office desk in Dubai with financial reports, a calculator, and digital tablet displaying tax compliance sp
Illustration

The UAE Federal Tax Authority issued a public clarification on November 11, 2026, regarding input tax deduction compliance under value added tax regulations. The clarification outlines mandatory verification procedures that taxable entities must conduct to ensure supplies are not tied to tax evasion arrangements.

Under the released guidance, registered businesses must examine supplier corporate status, operational substance, commercial rationale, and payment structures before claiming input VAT recovery.

The Federal Tax Authority noted that failing to carry out and retain documented due diligence enables the tax authority to disallow VAT deductions on relevant transactions. The guidance aims to assist entities in aligning procurement and accounting processes with statutory tax audit standards.

Sources

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