UAE VAT Input Tax Verification: 7 Key Rules Under FTA Decision No. 13 of 2026

Starting 1 October 2026, every VAT-registered business in the UAE will need to follow a stricter set of rules before it can claim Input Tax on a purchase. This is the essence of UAE VAT Input Tax Verification, introduced through Federal Tax Authority (FTA) Decision No. 13 of 2026. In simple words, the FTA now wants businesses to prove that a supplier is real and that a transaction genuinely happened — before that business reduces its VAT bill using Input Tax.

For Pakistani exporters, traders, and freelancers who deal with UAE companies — a very common scenario for businesses based in Sialkot — this decision matters just as much as it does for locally registered UAE entities. If your UAE-based buyer, distributor, or free-zone partner is a Taxable Person under UAE VAT Law, this new verification duty affects how they handle invoices coming from you too.

This guide breaks down the entire decision into plain English, explains who it applies to, and gives you a practical compliance checklist.

What Is FTA Decision No. 13 of 2026?

FTA Decision No. 13 of 2026 was issued on 22 July 2026 and takes effect from 1 October 2026. It was approved by the FTA Board of Directors under Article 54(bis) of the UAE VAT Law (Federal Decree-Law No. 8 of 2017).

In short, the decision lays out the exact measures, procedures, and conditions that a Taxable Person must follow to verify the validity and integrity of a supply before deducting Input Tax on it. The goal is straightforward: to reduce Tax Evasion, which the decision defines as any illegal method used to lower due tax, avoid paying it, or claim a refund a person was never entitled to.

Furthermore, this is not a vague guideline — it is a formal, article-by-article checklist that businesses will now be expected to follow and document.

Why UAE VAT Input Tax Verification Matters for Sialkot-Based Exporters

Sialkot is home to some of Pakistan’s largest exporters of surgical instruments, sports goods, and leather products, and many of these businesses route shipments and payments through UAE-based trading partners, agents, or free-zone companies. As a result, this decision doesn’t stay confined to Dubai or Abu Dhabi boardrooms — it directly shapes how your UAE counterpart treats invoices received from you.

However, it isn’t only exporters who are affected. Many Sialkot businesses also use UAE-based service providers — freight forwarders, sourcing agents, and consultants — as suppliers. If those UAE partners are Taxable Persons, they will now need to verify you before treating your invoice as valid for their own Input Tax claim.

Key Definitions You Should Know

Before going further, it helps to understand three terms the decision relies on heavily.

Taxable Person

A Taxable Person is any person who is registered, or legally obligated to register, for VAT purposes under UAE VAT Law.

Input Tax

Input Tax is the tax a business pays (or owes) when goods or services are supplied to it, or when it imports goods.

Tax Evasion

Tax Evasion, as defined in the decision, refers to a person’s use of illegal means that result in reduced tax due, non-payment of tax, or an unentitled tax refund.

Verifying the Supplier — Article 3 Requirements

Article 3 of the decision requires a Taxable Person to check the supplier itself before accepting an invoice for Input Tax purposes. This part of UAE VAT Input Tax Verification breaks down into four areas.

Identity Verification

• If the supplier is a natural person: obtain a copy of valid ID (Emirates ID or passport), and meet the supplier in person or virtually before the supply is made.
• If the supplier is a legal person (a company): verify incorporation details through official databases or the certificate of incorporation, and confirm the identity of the director, agent, or employee representing the supplier.

Address and Place of Business Verification

The Taxable Person must confirm that the supplier has an actual, physical place of business — either electronically or through a field visit — and that this location is consistent with the nature of the supplier’s declared business activity.

Risk Indicator Checks

A supplier is treated as higher-risk if any of the following apply:

1. The supplier changed its address more than twice in the previous 12 months.
2. The supplier changed key employees or managers more than twice in the previous 12 months.
3. The supplier’s transactions are unusually large, small, or unexpected compared to its normal business size and history.

If any of these red flags appear, the Taxable Person must keep a clear, documented explanation on file and be ready to show it to the FTA on request.

Bank Account Verification (Above AED 375,000)

Where supplies received from a single supplier exceed AED 375,000 over the past 12 months, or are expected to exceed that amount in the next 12 months, the Taxable Person must also:

• Obtain written confirmation from a UAE-authorised bank that the supplier holds a bank account.
• Review any publicly available reviews or media coverage about the supplier for red flags.

Verifying the Supply — Article 4 Requirements

While Article 3 focuses on who the supplier is, Article 4 focuses on whether the transaction itself makes sense. This is arguably the more detailed part of UAE VAT Input Tax Verification.

General Assessment

The Taxable Person must assess the transaction as a whole and confirm the supplier’s involvement is based on genuine commercial reasons — not just paperwork.

Payment Condition Assessment

• Payment methods must be commercially justifiable. If a third party is involved in payment, or funds move to a bank account outside the supplier’s home country, there must be a reasonable, documented commercial explanation.
• Payments should ideally be made electronically. Cash payments are allowed only where there is a documented commercial reason, the amount stays within legal thresholds, and it remains easily verifiable.

Supply Circumstances Verification

• Prices and profit margins should not be significantly different from market rates without a clear reason.
• The goods or services supplied must fall within the supplier’s normal, licensed business activity.
• The authenticity, origin, and ownership rights of goods received must be verifiable.
• If the supplier is acting as an intermediary, there must be a clear commercial explanation for that role.

Step-by-Step Compliance Guide

To make this decision practical, here is how a Taxable Person (or their Sialkot tax consultant handling UAE-linked accounts) should approach compliance, based on Article 5 of the decision:

1. Identify new or unverified suppliers. Check whether this is the first time you’re dealing with a supplier, or whether it has been more than 12 months since the last verification.
2. Run the supplier verification checklist from Article 3 — ID, incorporation, address, risk indicators, and bank account confirmation where applicable.
3. Verify each individual supply received under Article 4 — payment method, pricing reasonableness, and authenticity of goods or services.
4. Document every step. Keep copies of ID documents, incorporation certificates, bank confirmations, and any risk-indicator explanations in an organised file.
5. Maintain a written internal policy naming who is responsible for carrying out, reviewing, and supervising these verification checks within the business.
6. Retain all records in a designated location so they are ready if the FTA requests them during an audit.

Therefore, treating this as a one-time task is a mistake — it is an ongoing process that must be repeated for every new supplier and reviewed periodically for existing ones.

Exceptions: When Verification Isn’t Required

Article 6 provides some relief for smaller transactions. A Taxable Person may skip these verification steps where:

• The value of a single supply, excluding VAT, is less than AED 10,000.

Key Thresholds at a Glance

Frequently Asked Questions

Final Word from Trusty Consulting

UAE VAT Input Tax Verification is a good reminder that cross-border compliance runs in both directions — it isn’t only about what FBR expects from you in Pakistan, but also what your foreign partners now legally owe their own tax authority. As a Sialkot tax consultant with clients across Pakistan’s export industries and remote accounting clients in the UAE, KSA, and UK, Trusty Consulting helps businesses keep their documentation audit-ready on both sides of a transaction.