UAE: New Requirements for Supplier Verification to Reclaim VAT Credits

Verification of Suppliers and Supplies for the Purpose of Claiming a VAT Credit

(applicable to transactions subject to the standard 5% rate and the reverse-charge mechanism)

Effective October 1, 2026, in addition to the standard requirements for claiming a VAT credit, a VAT-registered entity must take reasonable measures to verify the validity and integrity of its supplies, confirming in particular that:

• the supplier is genuine; and
• the transaction and the underlying supply are valid and have actually taken place.

The measure is intended to prevent VAT credit claims arising from fictitious transactions, non-genuine supplies, or fraudulent invoices.

• Individuals: Obtain a valid identification document and verify the permit authorizing the supplier’s business activities. Meet with the supplier in person or via videoconference before concluding the transaction.
• Companies: Verify the details of the business license or articles of incorporation and the identity of the person acting on behalf of the supplier.
• Operational Presence: Confirm that the supplier has an active operational headquarters consistent with its business activities.
• Red flags: Be alert to frequent changes in address and/or key contacts, or to transaction amounts that are inconsistent with the supplier’s normal business activity.
• High-value suppliers: If the totalvalue of transactions with a supplier exceeds AED 375,000 (excluding VAT) over the previous 12 months, or is expected to exceed that amount in the next 12 months, obtain evidence that the supplier has a bank account and conduct public searches to identify negative reviews or other red flags.
  
  

• Commercial Rationale: Confirm the existence of a genuine commercial rationale for the transaction and the payment terms.
• Price and Business Activities: Confirm that the price is consistent with market values and that the goods or services are consistent with the supplier’s authorized business activities.
• Goods: For goods, verify their authenticity and confirm that the supplier owns or controls them.
  
  

• Supplier verification: Supplier verification remains valid for 12 months; therefore, it does not need to be repeated for every invoice issued by the same supplier.
• Transaction Verification: Each transaction must, however, be evaluated separately at the level of the individual supply.
• Documentation and Responsibility: Maintain documentation of the checks performed and maintain a written policy identifying the person(s) responsible for the process.
  
  

The verification requirements do not apply to individual supplies totaling less than AED 10,000 (excluding VAT), provided that the total value of the supplier’s supplies to the business has not exceeded AED 100,000 (excluding VAT) in the preceding 12 months and is not expected to exceed AED 100,000 (excluding VAT) in the following 12 months.

Once the threshold of AED 100,000 has been exceeded, or if it is expected to be exceeded, the verification requirements apply in full, even for individual supplies of less than AED 10,000.

Businesses must establish these verification procedures (and retain the relevant documentation), in addition to the supplier’s valid tax invoice, in order to claim VAT credits on purchases from local and foreign suppliers.

It is expected that the FTA will request the policy, the supplier verification records, and supporting documentation (such as a copy of the license, a copy of the Emirates ID or other identification document, a bank confirmation letter, and screenshots of online searches) as part of the VAT credit review requested by businesses during a VAT refund, VAT registration cancellation, or VAT tax audit.