FTA Decision No. 13 of 2026: VAT input tax deductions now require supplier verification

# What the FTA Changed

The Federal Tax Authority issued Decision No. 13 of 2026, imposing formal verification requirements on UAE businesses before they can claim input tax deductions on their VAT returns. Under the new rules, a taxable person must verify both the supplier's registration status and the validity of the supply itself prior to recovering input tax. The decision was published on 24 August 2026, as reported by Alvarez & Marsal.

This matters because input tax recovery sits at the centre of VAT cash flow management for most businesses. A company that purchases goods or services from a supplier later found to be unregistered, or whose supply is deemed invalid, could have its deduction disallowed entirely. The FTA is shifting the compliance burden from retrospective audit correction to pre-claim due diligence.

# Who This Affects and How

Any VAT-registered business in the UAE that claims input tax, which is the majority of taxable persons operating here, falls within scope.

The practical exposure is sharpest for businesses with high transaction volumes, complex supply chains or frequent dealings with new or informal suppliers. Construction, trading, logistics and hospitality firms typically face the greatest risk, given the volume of sub-contractors and spot suppliers they engage. Professional services firms with smaller supplier bases have a more contained problem, but are not exempt.

The verification requirement introduces a procedural step that many finance teams have not formally built into their purchase-to-pay workflows. That gap between existing practice and the new standard is where penalties accumulate. The FTA has a track record of applying administrative penalties to input tax overclaims, and a documented failure to perform supplier verification will likely be treated as an aggravating factor in any audit.

# What Verification Must Cover

Based on the decision as analysed by Alvarez & Marsal, verification must address two distinct elements: confirming the supplier holds a valid VAT registration number at the time of supply, and confirming the supply itself qualifies as a taxable supply eligible for input tax recovery. The FTA's public portal allows TRN lookups; businesses are expected to use it, and to retain evidence that they did so.

The timing of the check is relevant. Verifying a supplier once at onboarding and never again will not satisfy a requirement tied to the moment of each supply. High-frequency purchasing from a given supplier likely requires periodic re-verification, particularly around licence or registration renewal dates.

# What to Do About It

Review the current purchase-to-pay process and identify where supplier VAT registration is checked, by whom, and whether the evidence is retained in a retrievable format. If no such step exists, it needs to be built in before the next VAT return period closes.

Update supplier onboarding forms to capture TRN numbers and include a sign-off confirming FTA portal verification was completed. For existing supplier relationships, run a retrospective check against the FTA's register and document the results.

Brief the finance and accounts-payable teams on what constitutes a qualifying supply under UAE VAT law. The verification requirement covers both the supplier's status and the nature of the supply; a registered supplier can still generate an ineligible input tax claim if the supply itself is exempt or outside scope.

Consider including a TRN validity clause in supplier contracts, requiring the supplier to notify your business of any change to their VAT registration status. This provides a contractual paper trail alongside the operational one.

Businesses with upcoming FTA audits should conduct an internal review of recent input tax claims against these new standards before the auditor does.

# Sources

• Alvarez & Marsal: UAE FTA Decision No. 13 of 2026, Supplier and Supply Verification Before Input Tax Deduction (24 August 2026)