FTA Decision No. 13 of 2026 was issued on 22 July 2026, appeared on the Federal Tax Authority’s website on 20 August, and takes effect on 1 October 2026. It sets out the checks a business must run on its suppliers, and on individual purchases, before deducting input VAT. No FTA guide has been published alongside it. This note is written from the Authority’s own text, and it starts with what the Decision does not do, because that is where the practical answer lies.
What it does not do
It is easy to read this as no supplier checks, no input VAT. The Decision does not go that far, and the position it actually creates is more useful to know.
Decision 13 does not stand on its own. It gives content to Article 54 bis of the VAT Law, inserted by Federal Decree-Law No. 16 of 2025 and in force since 1 January 2026. Everything turns on its exact words, so here it is in full, as published on the UAE legislation portal:
1. The Authority shall reject the deduction of recoverable input tax if it is established that the supply in respect of which the deduction is claimed was part of a supply or a chain of supplies connected with tax evasion, and that the Taxable knew of such connection at the time of deducting the recoverable input tax.
2. The Authority may reject the deduction of recoverable input tax if it is established that the supply in respect of which the deduction is claimed was part of a supply or a chain of supplies connected with tax evasion, and that, having regard to the circumstances of the supply, the Taxable Person should have known of such connection.
3. For the purposes of applying the provisions of Clause (2) of this Article, a Taxable Person shall be deemed to have been required to know that the supply was part of a supply or a chain of supplies connected with tax evasion where the Taxable Person failed to verify the validity and integrity of the supplies received prior to deducting input tax, in accordance with the measures, procedures, and conditions determined by the Authority in this regard.
Quoted as printed, with the emphasis ours, and including the slip in clause 1 where “the Taxable” plainly means the Taxable Person. The FTA’s own consolidation of the VAT Law renders the same Arabic a little differently in English — “related to Tax Evasion” rather than “connected with tax evasion”, “aware” rather than “knew”. Nothing turns on the difference, and the Arabic governs either way.
Note the verbs, because they are carrying the whole architecture. Rejection is shall in clause 1 and may in clause 2 — mandatory where you knew, discretionary where you merely should have known. The shall in clause 3 is doing something different: it is not about rejecting anything, it makes the deeming automatic. And that third clause is where Decision 13 attaches: a taxable person is treated as having been required to be aware if they did not verify the validity and integrity of the supplies they received, in accordance with the measures the Authority determines. That deeming feeds the second limb only — the discretionary one.
Read the halves together and the practical position is clear. If there is no tax evasion anywhere in the chain, an imperfect supplier file does not cost you your input VAT — both limbs independently require evasion in the chain. But if there is evasion, and you did not run these checks, you have lost the ability to say you had no way of knowing. That defence is what Decision 13 takes away. Whether the presumption can be rebutted is not resolved by the English text, and we are not going to tell you it can.
One thing to be clear about, because the language is alarming and the effect is narrower than it sounds. Tax Evasion here is a defined term, not a loose description: the Tax Procedures Law defines it as a person’s use of illegal means resulting in a reduction of the tax due, non-payment of it, or a refund nobody was entitled to. And the evasion Article 54 bis is concerned with is somebody else’s, somewhere in the chain behind your invoice. Failing these checks does not make you a tax evader, and none of this is an allegation against you — it goes only to whether you should have known about another party’s conduct.
Does this apply to you?
Every VAT-registered business that deducts input tax. There is no sectoral carve-out, no government or regulated-entity exception, and nothing in the six pages excludes free zone or designated zone companies — designated zone status affects where a supply of goods takes place, not a taxable person’s deduction. Imports and reverse-charge supplies are caught as well: the Decision’s own definition of input tax expressly covers tax due “when conducting an Import”.
The only exception is monetary, and it is narrower than it looks.
Three numbers, and the one that governs you
| Threshold | Measured how | Effect |
|---|---|---|
| AED 10,000 | Per supply, VAT-exclusive. The test is less than. | You may disregard this Decision entirely for that supply. |
| AED 100,000 | Per supplier, aggregate, rolling 12 months back or expected forward. The test is exceeds. | Switches the AED 10,000 exception off completely for that supplier. |
| AED 375,000 | Per supplier, same rolling test. The test is exceeds. | Adds a UAE bank confirmation and a documented review of public reputation. |
The worked case that matters: an AED 8,000 invoice from a supplier you spend AED 120,000 a year with is not exempt. The first threshold would have covered it. The second disapplies the exception outright — so the full supplier check and the full supply check are required for that AED 8,000 purchase, and for every one after it.
Three boundary points, each easy to miss:
- The test is less than AED 10,000, so an invoice of exactly AED 10,000 does not qualify for the exception. It is also not the same line as the simplified tax invoice threshold in the VAT Executive Regulation, which reads “does not exceed AED 10,000”. A supply of exactly AED 10,000 falls on opposite sides of the two.
- Test the VAT-exclusive consideration, not the invoice total.
- There is no anti-fragmentation rule at supply level. Splitting an AED 30,000 order into four invoices does keep each one under the first threshold — and all AED 30,000 still counts toward the AED 100,000 supplier aggregate, which is the only backstop the Decision has.
And where the exception does apply, it disapplies the whole Decision, not just the invoice-level checks. The mirror of that is the trap — once AED 100,000 is crossed, supplier onboarding becomes due too, even for the small invoices.
One number, three unrelated tests. Supplies you make — the VAT mandatory registration threshold. Taxable income — the 0% Corporate Tax band. Purchases from one supplier — this Decision. The mechanics differ too: VAT registration looks forward 30 days, this Decision looks forward 12 months.
Once per supplier
Identity. Where the supplier is a natural person: a copy of the Emirates ID or passport, and — the part that will surprise people — you must meet them, in person or virtually, before the supply. Where the supplier is a company: verify incorporation through official records and obtain identification for the authorised representative. The meeting requirement does not apply to companies.
Place of business. Verify that the supplier has a real place of business, electronically or by visiting, and that it is consistent with what they actually do.
Risk indicators. Three of them: an address changed more than twice in the previous 12 months; key employees — managers, or the people you deal with — changed more than twice in the previous 12 months; and commercial transactions disproportionate or unexpected in volume, value or nature against the size and history of that supplier’s business. Where an indicator is present, the Decision requires you to obtain and document a reasonable explanation. It does not tell you to stop dealing with the supplier. It tells you to write the file note.
Above AED 375,000 with one supplier, two more: a written confirmation from an authorised bank in the State that the supplier holds a bank account, carrying no relevant reservations or conditions — usefully, it need not be issued to you — and a documented review of publicly available reviews and media coverage from reliable sources.
That bank letter is the hardest operational ask in the instrument, and it has an obvious gap. “An authorised bank in the State” means a UAE bank; a non-resident supplier will not hold one; and the Decision offers no alternative test while plainly bringing imports into scope. That is a question for the FTA, not one we can answer for you.
Every invoice
The workload is asymmetric, and this is the part most easily overlooked. The supplier file is annual — Article 5 requires verification when you deal with a supplier for the first time, or on recurrent dealings where they have not been verified in the previous 12 months. The supply check under Article 4 runs on every taxable supply you receive that is not inside the AED 10,000 exception.
Article 4 asks you to satisfy yourself that there is a genuine commercial rationale for the transaction; that price and margin are justifiable against the market; that the supply is not outside the supplier’s licensed activity; and, where a third party or intermediary is involved, that there is a reasonable commercial explanation for their role. For goods it adds authenticity and origin, and the validity of the supplier’s ownership or right to dispose. The Decision says what to verify. It sets no documentary standard for how — so do not accept that a certificate of origin has suddenly become mandatory.
Payment carries its own condition, in mandatory language. The consideration “shall be paid by electronic means”. Cash is not prohibited — the clause expressly contemplates it — but a cash payment must rest on a documented commercial reason, be easily verifiable, and fall within “the thresholds specified in the applicable Tax legislation”. We went looking for that threshold. The word “cash” does not appear anywhere in the VAT Law itself, and the one mention of it in the Tax Procedures Law is about settling a disputed amount with the Authority — not a ceiling on what you may pay a supplier. So two of the three conditions are workable today, and the third points at a figure we have not been able to find.
Update, 11 September 2026. The threshold now has a home. Cabinet Decision No. 149 of 2026, issued on 1 September, adds a Clause 3 to Article 54 of the VAT Executive Regulation, in force from 1 October — the same day as this Decision: input tax may not be recovered on any supply whose value exceeds an amount to be set in a decision of the Minister of Finance, where the consideration is paid or intended to be paid in cash, in accordance with the controls in that decision. The amount itself is still to come; at the date of this update the Minister’s decision had not been published. Two things follow. The cash condition above no longer points at nothing — it points at a ministerial threshold that will also, on its own and without any evasion in the chain, bar the input tax above it. And “intended to be paid” puts the test at the point of claim, not at settlement. Every amendment in Cabinet Decision 149, article by article →
The one document that has to exist by 1 October
Article 5(4) requires a documented policy for these verification procedures, stating the powers and responsibilities of the persons implementing, reviewing and supervising them, kept with your tax records.
Deal with this one first, for a specific reason: its timing does not depend on any of the open questions below. It is also the single thing an FTA officer can ask for on day one, because either it exists or it does not. It does not require three different people, and it is not filed with the Authority.
The policy is a short document, but it has to name the right people and match how your purchase ledger actually runs — a template with the wrong names in it is worse than none. We draft it alongside the rolling 12-month supplier analysis that tells you which suppliers sit above AED 100,000 and AED 375,000, because those two numbers decide how much of this Decision applies to you at all. Talk to us before 1 October →
What it costs if you get it wrong
Decision 13 carries no penalty of its own. There is none in its seven articles, and the consolidated administrative penalties schedule contains no violation for failing to verify a supplier, failing to verify a supply, or failing to hold the Article 5(4) policy. We have not found a penalty attached to this Decision in either instrument.
The exposure is the denied deduction itself, and then the ordinary consequences of an understated return under the penalty schedule — with a materially better outcome if you correct by voluntary disclosure before the Authority notifies an audit than after. Whether the general records penalty reaches these particular files is arguable, and we would not assert it either way.
Two things the Decision leaves open
Does this catch supplies received before 1 October but deducted on or after it? The Decision is silent — no transitional provision and no grandfathering, in either language version. There are textual pulls both ways. Article 2 scopes the Decision to verification “before deduction of Input Tax”, which points at the deduction date; but the duty to meet a natural-person supplier arises before the supply, which cannot be complied with retrospectively at all. We will not resolve that for you. The practical answer is the one that is right under either reading: start applying this to new suppliers and new purchases now.
From what point is the AED 10,000 exception lost once you cross AED 100,000 with a supplier? Article 6(2) says only that the exception “shall not apply”. No commencement point, no retrospective-adjustment mechanism, nothing on curing supplies already deducted. The prudent operating position — verify the supplier as soon as the forward-looking limb makes AED 100,000 foreseeable, on signing the framework contract rather than on crossing the line mid-year — is defensible under either answer.
There is a third gap worth naming. Article 54 bis has referred to “the measures, procedures and conditions determined by the Authority” since 1 January 2026, but the Decision determining them takes effect on 1 October 2026. We found no earlier instrument specifying them for that nine-month window, and we cannot confirm that none exists. The position for that period is unclear.
E-invoicing will not do this for you
Different regimes, different timelines, different populations. Decision 13 bites on 1 October 2026. E-invoicing Phase 1 goes live on 1 January 2027 for businesses at or above AED 50 million, with smaller businesses following later in 2027 — and the Phase 1 ASP appointment deadline now sits at 30 October 2026. E-invoicing covers B2B and B2G; B2C sits outside it, and outside nothing in Decision 13.
More fundamentally, an Accredited Service Provider validates the structure of an invoice against the FTA’s data dictionary. It does not verify that your supplier exists, trades from a real address, or sits in an honest chain. That reading of the overlap is ours, not the Authority’s.
Your September
- Run a rolling 12-month purchase report by supplier and sort it into three buckets: above AED 375,000, above AED 100,000, and the rest. Note what that means — on 1 October the look-back already reaches back to October 2025. The data you need is historic, not future. A business that cannot produce spend by supplier for the last twelve months is already behind.
- Build the supplier file for both upper buckets: identification, incorporation, place of business, risk-indicator notes. Add the bank confirmation and the reputation review for the top bucket — and start the bank letters early, because they run on someone else’s turnaround.
- Write the Article 5(4) policy and name who implements, who reviews and who supervises.
- Put the Article 4 checks into the purchase-invoice approval workflow. They run on every invoice, and nobody will do them as a separate monthly exercise.
- Decide your position on cash payments now, in writing, while it is a policy choice rather than an audit answer — and tag cash-settled purchase invoices in the ledger, because from 1 October the Executive Regulation bars input tax on cash purchases above a threshold the Minister is to set (Article 54(3), added by Cabinet Decision No. 149 of 2026).
Written on 20 August 2026 from the FTA’s published text of Decision No. 13 of 2026 and the consolidated VAT Law published by the Ministry of Finance (the consolidation of 28 November 2025, which carries Article 54 bis as inserted by Federal Decree-Law No. 16 of 2025). Article 54 bis is quoted from the UAE legislation portal, uaelegislation.gov.ae. Tax Evasion is defined at Article 1 of Federal Decree-Law No. 28 of 2022 on Tax Procedures. The FTA had issued no guidance on this Decision at that date, and we found no published commentary on it. Updated 11 September 2026 for Cabinet Decision No. 149 of 2026, which adds Article 54(3) to the Executive Regulation from 1 October 2026; the Minister’s decision setting the cash threshold had not been published at that date. The English texts are unofficial translations; the Arabic governs. We will update this page again when the threshold or FTA guidance is published. General information on published law, not advice on your own position.