FTA Decision No. 13 of 2026: What Changes for Input VAT on 1 October 2026

From 1 October 2026, holding a valid tax invoice is no longer the whole of your input VAT position. FTA Decision No. 13 of 2026 sets out the verification measures a business is expected to carry out on a supplier and on the supply itself, and the records that must exist to show the work was done. Where a supply turns out to form part of a chain connected to tax evasion, the question the Authority asks is whether you knew, or should reasonably have known. The Decision turns that question into something you can act on before the deduction: a defined list of supplier checks, a defined list of supply checks, one per-supply threshold and two rolling supplier thresholds. Below the thresholds the measures may be disregarded. Above them they apply, and the file has to carry the evidence.

Federal Decree-Law No. 16 of 2025 inserted Article 54(bis) into the VAT Law with effect from 1 January 2026. That article allows the Federal Tax Authority to deny input tax recovery where a supply forms part of a chain connected to tax evasion and the recipient knew, or should reasonably have known, that it did. The power has therefore been live since the start of the year.

What was missing was the standard. Article 54(bis) does not say what a business is expected to have checked, and “should reasonably have known” is not a measurable test on its own. Decision No. 13 of 2026 supplies that detail: it defines the verification measures that evidence a reasonable position, the thresholds at which each set applies, and the documentation and governance that must sit behind them.

The consequence in Article 54(bis) is the denial of input tax recovery on the supply concerned. It is not a fixed penalty, and it does not depend on any single missing document. It depends on whether your position on the supply was reasonable, and on what you can show.

The Decision was approved, issued and published across three months of 2026, with a deliberate gap before it takes effect. That gap is the implementation window: work done before 1 October is preparation, and work done after it is evidence.

Three figures decide how much verification a supplier attracts. One is measured per supply; two are measured per supplier on a rolling 12-month basis, taking the past or next 12 months, whichever is higher.

FTA Decision No. 13 of 2026The three thresholdsEffective 1 October 2026

ThresholdWhat it triggers

AED 10,000Per supply, excluding VAT

Below this figure, and only where the rolling 12-month total for the same supplier is at or under AED 100,000, the verification measures may be disregarded. The documentation and governance duties under Article 5 still apply.

AED 100,000Rolling 12 months, per supplier

The ceiling on the relief. Once the rolling total passes it, standard verification applies: the supplier checks in Article 3 and the supply checks in Article 4, on every supply from that supplier.

AED 375,000Rolling 12 months, per supplier

Above this figure, enhanced verification applies on top of the standard measures: a written bank account confirmation letter from the supplier’s bank, and a reputation and adverse media review, under Article 3(4).

Two points are easy to miss. The AED 10,000 relief is not a standalone small-invoice exemption: it only holds while the supplier’s rolling total stays at or under AED 100,000, so a supplier you buy from in small amounts many times a year leaves the relief during the year. And the thresholds set the floor, not the ceiling — where a check raises a red flag, a documented and justified explanation is required whatever the value of the supply.

Article 3 asks who you are dealing with, and whether that answer is consistent. The identity work differs for a natural person and a legal entity; the place-of-business and risk work is the same for both.

Article 4 turns to the transaction. The tests are commercial rather than documentary: does the deal make sense, does the money move the way a genuine deal would, and does the supplier’s licence cover what was sold.

Article 5 is where most businesses will have the furthest to travel, because it asks for a system rather than a set of documents. It applies to every supplier and at every threshold, including supplies where the verification measures may be disregarded.

“In reviewable form” is the operative phrase. Evidence held in a personal inbox, or in a folder nobody outside the team can navigate, is unlikely to satisfy a reviewer working through a supplier file two years after the supply.

The Decision reads as a tax measure, but it lands on three operational teams. In most SMEs the work is not analytical; it is a question of who captures what, and when.

Onboarding becomes a gate rather than a form. A new supplier cannot be approved until identity, place of business and licensed activity have been verified and the evidence attached to the record (Article 3). Where a supplier sits in the chain as an intermediary rather than the producer or primary distributor, the commercial reason for that role belongs in the sourcing file at the point the decision is made, not reconstructed later (Article 4).

Payment route turns into a control. Electronic payment is the expected route; cash needs a clear commercial reason and must stay within legal thresholds; third-party or offshore-account payment needs a documented explanation (Article 4). The practical change is timing — the explanation has to exist before the payment is released, which means AP needs a defined exception path and someone empowered to approve it.

Two fields decide whether any of this is manageable, and most master files hold neither: the date of last verification, which drives the 12-month re-verification cycle (Article 5), and the rolling 12-month total, which determines whether a supplier has passed AED 100,000 or AED 375,000. Add supplier type, whether enhanced measures apply, and a pointer to where the evidence is stored, and the file answers a reviewer’s questions without a search.

Nine steps, in the order that removes the most exposure first. Suppliers with the largest rolling totals carry the largest deductions, so they come first.