UAE VAT Update: New FTA Rules Put Supplier Verification and Tax Record-Keeping in Focus
New Federal Tax Authority requirements are bringing supplier verification, transaction verification and tax record-keeping into sharper focus for UAE businesses.
The UAE’s tax compliance framework is evolving. Two recent Federal Tax Authority (FTA) decisions introduce requirements with important implications for VAT compliance, input tax recovery and the maintenance of accounting records and commercial books.
FTA Decision No. 13 of 2026, effective from 1 October 2026, sets out measures, procedures and conditions relating to the verification of the validity and integrity of supplies before the deduction of input tax.
Alongside it, FTA Decision No. 4 of 2026, effective from 30 July 2026, introduces requirements relating to the maintenance of information contained in accounting records and commercial books.
Together, the developments reinforce a broader message: VAT compliance will increasingly require businesses to look beyond tax invoice and maintain appropriate controls over the supplier, transaction and supporting evidence.
Supplier verification takes on greater importance
Decision No. 13 introduces prescribed verification measures concerning suppliers and taxable supplies before input tax is deducted.
Businesses are required to undertake the prescribed verification measures, where applicable, including verification of matters such as a supplier’s identity and, where the supplier is a legal person, its incorporation and authorised representative. They must also verify the supplier’s actual place of business and consider specified risk indicators.
The circumstances of the supply are also relevant. Businesses are required to consider factors including whether there are genuine commercial reasons for the transaction, whether payment arrangements are commercially justifiable, whether pricing or profit margins are reasonable, and whether the goods or services are consistent with the supplier’s ordinary or licensed activities.
For many businesses, this means that VAT compliance extends beyond the finance function to procurement, accounts payable and management, with appropriate processes needed to support supplier and transaction verification.
Three key thresholds for businesses
The Decision No.13 contains three particularly important thresholds:
Less than AED 10,000: Prescribed verification measures may be disregarded for an individual taxable supply where the consideration, excluding VAT, is less than AED 10,000, subject to the conditions in the Decision.
AED 100,000: The lower-value exception does not apply where the total value of supplies received from the same supplier exceeds AED 100,000 during the preceding 12 months, or is expected to exceed AED 100,000 during the following 12 months.
AED 375,000: Where supplies received from a supplier exceed AED 375,000 during the preceding 12 months, or are expected to exceed this amount during the following 12 months, the additional verification measures specified in the Decision apply, including specified bank confirmation and a review of publicly available information from reliable sources.
Accordingly, businesses should consider cumulative supplier spend over the relevant 12-month periods, rather than assessing invoices in isolation.
Record-keeping requirements are also changing
FTA Decision No. 4 places greater emphasis on the quality and accessibility of accounting records and commercial books.
Records are required to be complete, clear and legible and accessible to the FTA upon request, including access to the systems in which electronic records are maintained. Businesses should therefore ensure that their accounting records and supporting documentation are properly maintained and can be produced in an accessible form when required.
Businesses should also be mindful that outsourcing record-keeping activities to a third party to maintain records and commercial books does not transfer the taxpayer’s legal responsibility for maintaining the required records and ensuring their proper preservation and safety.
What should businesses do now?
With Decision No. 13 taking effect from 1 October 2026, businesses should assess whether their existing VAT controls and procedures adequately address the new requirements.
Supplier verification is required when dealing with a supplier for the first time, or when dealing with the supplier again where the supplier has not been verified during the preceding 12 months. Where applicable, verification steps should be documented, supporting records retained, and responsibilities for implementing, reviewing and supervising the procedures clearly defined.
Businesses should consider implementing or strengthening:
- Supplier onboarding and verification procedures;
- Supplier due diligence and periodic re-verification;
- Controls over cumulative supplier spend;
- Transaction-level review procedures;
- Documentation supporting the commercial rationale for significant transactions;
- Accounts payable controls over supplier information and payment arrangements; and
- Processes for retaining and retrieving supporting records
For investors, founders and family offices, these developments also underline the growing importance of tax governance as part of wider corporate governance and transaction readiness.
The practical message is clear: businesses should not rely solely on the validity of a tax invoice when considering input recovery. They should also be able to demonstrate that appropriate verification and record-keeping procedures have been undertaken in accordance with the applicable requirements.
How Trinity Group can help
Trinity Group supports businesses and investors navigating the UAE’s evolving regulatory environment. We can help you understand what the new VAT requirements mean for your UAE operations, identify areas requiring attention and determine where further action or specialist advice may be needed.
Speak to Trinity Group to understand what these changes could mean for your business.