A compliant invoice alone won't cut it.
FTA DECISION NO. 13 OF 2026 · EFFECTIVE 1 OCT 2026
Before :
Valid Tax Invoice + Normal VAT recovery requirements
| BEFORE | FROM 1 OCTOBER 2026: |
|---|---|
Valid Tax Invoice + Normal VAT recovery requirements. | A Taxable person must follow the mandatory 3-Pillar Verification Framework
Gives effect to Article 54(bis) of the VAT Law, a valid invoice alone is not sufficient, subject to the applicable VAT requirements. |
| WHO MUST COMPLY |
|---|
All taxable persons, regardless of sector or size. Verification is risk-based the depth of checks should match the value and risk of the transaction not be one-size-fits-all. |
SUPPLIER-LEVEL VERIFICATION
Three checks before you engage a supplier
1. IDENTIFY THE SUPPLIER
Natural person: Emirates ID/Passport + evidence of a meeting (In person or Virtual) before the supply.
Legal person: Trade license, TRN certificate, Incorporation check vs official database, representative ID/passport.
2. VERIFY THE ADDRESS
Confirm that the office/place of business exists (field visit or e-verification) and is consistent with the claimed activity.
Note:A mismatch is not automatic fraud-It must be explained and documented.
3. CHECK RISK INDICATORS (12 MONTHS)
- Address changed more than twice.
- Key personnel changed more than twice.
- Transaction volumes disproportionate to history.
If any flag exists, obtain a written justification backed by evidence and retain it.
SUPPLY-LEVEL VERIFICATION
Not just who - What and Why
1. COMMERCIAL RATIONALE
Is there a genuine business reason to use this specific supplier?
2. PAYMENT CONDITIONS
Offshore/third-party payments need a clear explanation. Electronic Payment of preferred cash needs a genuine reason and traceability.
3. COMMERCIAL REALISM
Pricing and margins should be realistic goods/services should match the supplier's license and actual activities.
4 GENUINENESS & OWNERSHIP
The supplier must own or have the right to supply the goods/services. Any intermediary needs a clear commercial rationale.
Full input VAT recovery defense needs both: A Genuine Supplier & A Genuine Supply.
GOVERNANCE AND EVIDENCE
From checklist to Control
1 GOVERNANCE
- Written Policy
Define who checks and approves. - Centralized evidence file
Maintain one retrievable verification file. - Clear Ownership
Procurement → AP → Finance/Tax → Reviewer. - Ongoing Re-Verification
Re-check when risk or transaction value changes.
2 ACTIONS BY 1ST OCT
- Segment suppliers by spend & risk.
- Build verification files.
- Assign sign-off owners.
- Set up monitoring.
- Dry-run top suppliers.
Input VAT recovery requires substance behind the invoice: A genuine supplier and an actual supply.
THRESHOLDS & ADDITIONAL CHECKS
Know your ladder
All amounts exclude VAT monitored on a rolling 12-month basis:
- AED 10,000
Below this, a single supply may skip full checks as a standalone transaction. Not a blanket exemption. - AED 100,000
Cumulative suppliers spend past this over 12 months → the AED 10,000 relief no longerapplies. Full verification applies to every supply. - AED 375,000
Cumulative supplier spends past this over 12 months → bank confirmation + reputationcheck required (below).
REPUTATION CHECK
Dated screenshots of reviews/media or industry reports confirming active market presence.
BANK VERIFICATION
Confirmation/IBAN letter from a UAE -authorized bank, without qualifying conditions.
HOW BAM TAX ADVISORS CAN HELP
From Requirement to Practical Process
- Compliance & gap assessment
- Supplier risk assessment & verification
- Documentation & staff training
- Ongoing monitoring & FTA readiness
Stronger Input VAT Recovery Defense
The time to build the process is before the first FTA review - not during it.
