Recovering input Value Added Tax (VAT) is an important part of business operations in the UAE. However, businesses must ensure that their suppliers and transactions are properly verified, particularly where a supply may be connected to tax evasion.

On 11 November 2026, the Federal Tax Authority (FTA) issued VAT Public Clarification VATP048, titled “Verification of the Validity and Integrity of the Supplies before Deduction of Input Tax”. The clarification explains the verification procedures businesses should consider before deducting input tax and provides further guidance on the requirements established under FTA Decision No. 13 of 2026.

It covers supplier identity checks, business premises, risk indicators, transaction values, payment arrangements and the documentation businesses should maintain to demonstrate appropriate due diligence.

Published: 12 November 2026 | Category: VAT Updates & Compliance

Understanding the New FTA Verification Requirements

Under Article 54 bis of Federal Decree-Law No. 8 of 2017, as amended, the FTA may reject the deduction of recoverable input tax where it establishes that a supply is part of a supply or chain of supplies connected to tax evasion and the taxable person knew, or should have known based on the circumstances, about that connection.

VATP048 explains how businesses can demonstrate that they were unaware, and could not reasonably have been expected to be aware, of the tax evasion.

Importantly, the clarification does not require every verification measure to be applied to every ordinary purchase. Its requirements are relevant when assessing whether a business took appropriate verification steps in circumstances involving supplies connected to tax evasion.

FTA Decision No. 13 of 2026, which establishes the relevant measures, became effective on 1 October 2026.

1. Supplier Identity and Business Location Verification

Businesses should verify supplier identities when dealing with them for the first time or when an existing supplier’s identity has not been verified during the previous 12 months.

The requirements depend on the type of supplier.

For individual suppliers:

• Obtain a copy of valid identification, such as an Emirates ID or passport.
• Meet the supplier in person or virtually before the supply is made.

For legal entities:

• Verify incorporation through official databases or obtain the relevant incorporation documents.
• Check that the entity’s details are valid and consistent with its name, address, employees and other relevant information.
• Verify the identity of the authorised director, agent or employee and obtain valid identification.

Businesses must also verify the supplier’s actual business location through electronic mapping and navigation platforms or a physical visit. The premises should be consistent with the nature of the supplier’s business activities.

2. Identifying Supplier Risk Indicators

The clarification identifies circumstances that may indicate potential supplier-related risks, including:

• Frequent address changes: More than two business address changes during the previous 12 months.
• Frequent changes in key employees: More than two changes involving managers or employees with whom the taxable person deals during the previous 12 months.
• Unusual transactions: Commercial transactions disproportionate or unexpected in volume, value or nature compared with the supplier’s business size and history.

Where these indicators apply, businesses must retain a clear and justified explanation and provide it to the FTA upon request. The explanation must not contradict available information or evidence.

3. Additional Checks for Suppliers Exceeding AED 375,000

Additional checks apply when the value of taxable supplies received from the same supplier exceeds AED 375,000 during the previous 12 months or is expected to exceed AED 375,000 during the next 12 months.

Businesses must:

• Verify the supplier’s UAE bank account: Obtain written confirmation from an authorised UAE bank confirming that the supplier has a bank account. An IBAN confirmation letter may be used, provided it contains no relevant reservations or conditions.
• Review publicly available information: Assess customer reviews and media coverage from reliable sources to determine whether the information is consistent with the supplier’s business and whether it indicates suspected tax evasion.

4. Verification of Individual Taxable Supplies

Beyond verifying suppliers, businesses must assess the commercial circumstances of each taxable supply.

VATP048 identifies three main areas:

Commercial purpose: Ensure that the supplier’s involvement in the transaction is based on genuine and justifiable commercial reasons.

Payment arrangements: Assess whether payment conditions are commercially reasonable. Particular attention should be given to third-party payments, payments to bank accounts outside the supplier’s country of incorporation and cash payments.

Consideration should generally be paid electronically. Cash payments must have a documented commercial reason, comply with applicable tax legislation thresholds and be easily verifiable.

Authenticity and circumstances of the supply: Businesses should verify that:

• Prices and profit margins are commercially reasonable.
• Goods or services fall within the supplier’s ordinary business activities or authorised commercial licence.
• Goods received are authentic and their origin can be established.
• The supplier owns the goods or has the legal right to dispose of them.
• Any intermediary involved has a clear and justifiable commercial role.

For example, unusually low prices, transactions outside a supplier’s licensed activities or unexplained third-party payment arrangements may require further assessment and supporting explanations.

5. Exceptions for Lower-Value Supplies

Businesses may disregard the verification measures and conditions relating to an individual taxable supply where its consideration is less than AED 10,000, excluding VAT, provided that the total value of supplies received from the same supplier:

• Did not exceed AED 100,000 during the previous 12 months; and
• Is not expected to exceed AED 100,000 during the next 12 months.

If the supplier-level threshold is exceeded or expected to be exceeded, the exception does not apply.

This is not a blanket exemption from supplier identity verification or other applicable compliance and recordkeeping requirements.

6. Documentation and Internal Verification Policies

Businesses must maintain evidence demonstrating that appropriate verification procedures have been undertaken.

The requirements include:

• Documenting the verification steps taken for each supplier and taxable supply.
• Retaining supporting records that allow the FTA to verify the procedures implemented.
• Maintaining a documented internal verification policy.
• Identifying the individuals responsible for implementing, reviewing and supervising the procedures.
• Clearly defining their authority, duties and responsibilities.

These records help demonstrate that supplier and transaction verification forms part of the business’s internal compliance procedures.

What Businesses Should Do Next

Businesses should review their existing supplier onboarding, procurement and accounts payable procedures to ensure that the relevant verification measures are incorporated.

In particular, they should monitor supplier transaction values, assess unusual payment arrangements, verify business activities and premises, and maintain supporting documentation.

Establishing clear internal responsibilities and regularly reviewing supplier information can also help businesses identify potential risks and strengthen their VAT compliance controls.

Conclusion

VAT Public Clarification VATP048 provides important guidance on verifying the validity and integrity of supplies before deducting input tax, particularly where transactions are connected to tax evasion.

By clarifying supplier verification, transaction assessments, applicable thresholds, exceptions and documentation requirements, the FTA highlights the importance of appropriate due diligence in the UAE’s VAT framework.

Businesses should review their existing procedures and ensure that their verification processes are properly documented to support compliance and protect their input tax recovery position.

This article is intended for general informational purposes only and does not constitute tax or legal advice. Businesses should refer to VATP048, FTA Decision No. 13 of 2026 and the applicable UAE VAT legislation when assessing their specific circumstances.

Official References

• Federal Tax Authority – VATP048: Verification of the Validity and Integrity of the Supplies before Deduction of Input Tax
• Federal Tax Authority – FTA Decision No. 13 of 2026
• UAE Legislation – Federal Decree-Law No. 8 of 2017 on Value Added Tax, as amended