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UAE VAT Due Diligence Rules 2026: Complete Guide for Businesses

October 2, 2026Plus UAE Editorial Team8 min read

UAE VAT Due Diligence Rules (From 1 October 2026): Supplier Verification Guide

UAE VAT Compliance Guide

UAE VAT Due Diligence Rules (From 1 October 2026): Supplier Verification Guide

From 1 October 2026, the UAE VAT due diligence rules change how input VAT is claimed. FTA Decision No. 13 of 2026 expects VAT-registered businesses to verify suppliers and supplies, and keep evidence, before deducting input tax. A valid tax invoice alone is no longer enough.

New to the system? Start with our guide to VAT registration in the UAE , then use the tables below to build your supplier verification process.

Expert guidance | Updated October 2026

Review My Supplier Process →

Decision at a Glance

The key facts behind the new input VAT verification requirements.

Rule: FTA Decision No. 13 of 2026, effective 1 October 2026
Legal basis: Article 54 bis of the VAT Law
Applies to: VAT-registered businesses claiming input VAT on purchases
Two levels of checks: supplier verification and supply verification
Enhanced checks: where annual supplies from one supplier exceed AED 375,000
Small-supply exemption: supplies below AED 10,000 (excluding VAT), subject to the Decision's conditions

What Changed? Before vs After

The shift is from relying on invoices to proving that you knew who you were dealing with.

Area	Before 1 October 2026	From 1 October 2026
Input VAT support	A valid tax invoice was generally enough	Tax invoice plus documented supplier checks
Supplier checks	Limited and informal	Formal verification when dealing with a supplier for the first time, and again after 12 months
Documentation	Focused mainly on invoices	Documented audit trail for every VAT claim
Team involvement	Procurement and VAT compliance worked separately	Verification built into procurement, finance and tax workflows
Policy	Often no written procedure	Documented internal policy expected

Who Must Follow the UAE VAT Due Diligence Rules?

Any VAT-registered business claiming input VAT, whatever its size.

Industrial

Manufacturing, Construction, Engineering, Oil & Gas

Trade and Logistics

Retail, Logistics, Import & Export, Trading Companies

Services

Professional Services, Technology, Healthcare, Hospitality

Jurisdiction

Mainland Companies and Free Zone Businesses

Supplier Verification Matrix for UAE VAT Due Diligence Rules

Use this matrix to apply the UAE VAT due diligence rules to every supplier.

What to verify	Evidence to collect	When	Suggested owner
Legal existence	Valid trade licence, legal business name	First dealing, then every 12 months	Procurement
VAT status	VAT registration details	First dealing, then every 12 months	Finance
Business activity	Licensed activity matches the goods or services invoiced	Every new supply type	Procurement
Business location	Physical address and contact information	First dealing, then every 12 months	Procurement
Authorised representative	Emirates ID or passport (where appropriate), authorisation letter, signing authority	First dealing and whenever representatives change	Procurement / Legal
Bank account	Written bank confirmation from a UAE-authorised bank	Enhanced check, above AED 375,000 annual supplies	Finance
Public information	Review of public reviews and media coverage	Enhanced check, above AED 375,000 annual supplies	Compliance
Payment	Electronic payment confirmation	Every transaction	Accounts Payable

High-Risk vs Low-Risk Suppliers

Apply the UAE VAT due diligence rules in proportion to the nature, value and risk of each transaction.

Factor	Lower risk	Higher risk
Relationship	Long-standing, verified within 12 months	New, or not verified for 12+ months
Transaction value	Small supplies, below AED 10,000	High-value or annual supplies above AED 375,000
Activity fit	Goods or services match the supplier's licence	Supply falls outside licensed activities
Company stability	Stable address and key staff	Frequent changes of address or key employees
Size vs volume	Transactions consistent with the supplier's size and history	Transactions out of line with size or history
Invoice details	Consistent across invoice, contract and licence	Inconsistent names, addresses or details
Payment	Electronic payment	Unusual or non-electronic payment arrangements
Evidence	Delivery or service records on file	Missing delivery, service or payment proof
Recommended action	Standard checklist and annual review	Full verification, bank confirmation, senior approval

Documents Required Under the UAE VAT Due Diligence Rules

Keep these on file for every supplier so each input VAT claim can be supported in an FTA review.

Document	What it proves
Supplier verification checklist	Due diligence was completed
Trade licence	Supplier's legal existence and activity
VAT registration details	Supplier's VAT status
Bank confirmation	Supplier holds a UAE bank account (enhanced check)
Purchase order	Commercial intent
Contract or agreement	The business relationship
Tax invoice	Basis of the VAT claim
Delivery note or service record	Goods or services were actually supplied
Payment record	The transaction took place
Internal approval	Governance and sign-off before VAT recovery
Supplier correspondence	Transaction history

6-Step Process for the UAE VAT Due Diligence Rules

A simple workflow that moves verification into everyday procurement and finance operations.

1. Collect

Request licence, VAT details, company profile, address and representative details.

Output: Supplier file

2. Verify

Check name, VAT registration, activity, location and signatory.

Output: Verified supplier

3. Record

Document each check, with copies and review notes.

Output: Verification form

4. Approve

Finance confirms checks are complete before recovering input VAT.

Output: Approval record

5. Monitor

Re-review every 12 months and after ownership or VAT changes.

Output: Annual review record

6. Retain

Store records securely so they can be produced quickly.

Output: Audit-ready file

When to Apply the UAE VAT Due Diligence Rules

Verification is not a one-time exercise. Repeat it whenever one of these happens.

Before claiming input VAT on a purchase
When onboarding a new supplier
Before a high-value or long-term contract, with enhanced checks
When a supplier has not been reviewed in the last 12 months
When a supplier's ownership or authorised representatives change
When VAT registration or business details change
When an invoice looks inconsistent or a transaction is unusual, escalate and investigate

Common Mistakes to Avoid

Even genuine transactions can face scrutiny when verification was never documented.

⚠

Assuming a valid invoice is enough

Pair every tax invoice with a documented supplier verification.

⚠

Not confirming VAT registration

Record the supplier's VAT details at onboarding.

⚠

Accepting invoices from unauthorised signatories

Verify signing authority before approving.

⚠

Skipping long-standing suppliers

Review every supplier at least every 12 months.

⚠

Missing delivery or payment records

Keep proof of supply and payment with each claim.

⚠

Relying only on email

Keep supporting documents, not just correspondence.

Risks of Non-Compliance

What is at stake if the UAE VAT due diligence rules are skipped or left undocumented.

Input VAT: recovery questioned or denied during an FTA audit
VAT refunds: delays while evidence is requested
Compliance: additional reviews and administrative work
Procurement: weak controls and exposure to supplier fraud

Under Article 54 bis, the FTA can deny input VAT recovery where a supply is linked to tax evasion and the business knew, or should have known, of that link. Documented checks are your evidence of reasonable care.

Who Owns What Internally

Supplier verification works best when each team has a clear role.

Procurement

Supplier onboarding and document collection

Finance

Approval before input VAT recovery

Accounts Payable

Payment evidence and record storage

Compliance / Tax

Written policy, periodic reviews and FTA audit readiness

Audit-Ready Checklist

Use this checklist to confirm you meet the UAE VAT due diligence rules before recovering input VAT.

Supplier trade licence verified
VAT registration details confirmed
Authorised representative verified
Bank confirmation obtained where required
Commercial documents reviewed
Delivery and payment evidence retained
Internal approval completed
Annual review scheduled

Frequently Asked Questions

Common questions about the new input VAT verification rules.

1. Is a tax invoice still required?

Yes. A valid tax invoice remains essential, but it should be supported by documented supplier verification before input VAT is claimed.

2. Do existing suppliers need to be reviewed?

Yes. Verify a supplier again if it has not been verified in the previous 12 months, or if its details have changed.

3. Does every supplier need the same level of checks?

No. Checks should match the value and risk of the supply. Enhanced checks apply where annual supplies exceed AED 375,000, and a limited exemption exists below AED 10,000 (excluding VAT).

4. How long should supplier records be kept?

In line with UAE tax record retention requirements. Confirm the current period with your tax adviser.

This guide is general information, not tax advice. Check the full text of FTA Decision No. 13 of 2026 on the FTA website for exact requirements.

Conclusion

Following the UAE VAT due diligence rules protects your input VAT claims, tightens procurement controls and makes FTA audits easier to handle. Businesses that build verification into everyday workflows will be best placed under the new rules.

Updated October 2026 | plusuae.com