Key takeaways
- From 1 October 2026, FTA Decision No. 13 of 2026 expects a business to check a supplier before deducting input VAT: on first dealing, at least every 12 months, and for each supply.
- Supplies under AED 10,000 (excluding VAT) are outside the checks, unless the total with that supplier exceeds AED 100,000 in 12 months.
- Keep a written verification policy and evidence of each check. A check that cannot be evidenced will not support the claim.
- FTA Decision No. 17 of 2026 sets conditions for recovering VAT on staff transport, accommodation, phones and data, food in remote locations and business parking.
Two decisions of the Federal Tax Authority (FTA) took effect on 1 October 2026, and both change what a business needs before it claims input VAT, the VAT paid on purchases and deducted in the return. FTA Decision No. 13 of 2026 sets out the checks to make on a supplier before deducting the VAT on its invoices. FTA Decision No. 17 of 2026 sets the conditions for recovering VAT on certain employee expenses. Both turn on evidence: what was checked, and what can be shown. For an organisation with a large supplier base, several entities or a shared payables team, the work sits in the vendor master and the approval workflow rather than with any one person. For businesses on calendar quarters, October to December is the first VAT quarter to start under the new rules.
Why the input VAT checks exist
Since 1 January 2026, Federal Decree-Law No. 16 of 2025 has allowed the FTA to deny input tax where a supply forms part of a tax-evasion arrangement. FTA Decision No. 13 of 2026, issued on 22 July 2026 under Article 54 bis of the VAT Law (Federal Decree-Law No. 8 of 2017), sets out the measures a business should take before deducting input tax (Arts. 3 to 6).
The supplier checks
The checks operate at two levels.
On the supplier itself, when the relationship starts and at least every 12 months after that:
- its identity or incorporation;
- that it has a real place of business;
- risk indicators;
- confirmation of its bank account, where supplies from it exceed AED 375,000 in 12 months.
On each supply:
- the commercial reason for the purchase;
- payment by electronic means;
- the price;
- whether the supplier is licensed for the activity.
A documented verification policy and evidence of the checks must also be kept. In practice, a check that was made but cannot be shown counts for little.
The AED 10,000 and AED 100,000 thresholds
Supplies under AED 10,000, excluding VAT, are exempt from the checks, unless the total with that supplier exceeds AED 100,000 in 12 months. Three examples, all excluding VAT:
| Supplier | Spend pattern | What applies |
|---|---|---|
| Stationery supplier | Orders of about AED 600, around AED 7,000 a year | Under both thresholds: outside the checks |
| Cleaning contractor | AED 9,000 a month, AED 108,000 over 12 months | Each invoice is under AED 10,000, but the 12-month total is over AED 100,000: the checks apply |
| Fit-out contractor | AED 480,000 over 12 months | Full checks, plus bank-account confirmation, as supplies exceed AED 375,000 |
The cleaning contractor is the case that catches organisations out. A supplier can pass AED 100,000 without any single invoice looking significant, particularly where several sites or entities buy from it. A rolling 12-month spend total per supplier is therefore needed, not only a check at onboarding.
What to change in accounts payable
Accounts payable (AP) is the process from receipt of a supplier invoice to its payment. The aim is to make the checks part of the process, so they happen by default:
- Write the policy. One or two pages covering which checks are made, by whom, what evidence is kept and when each supplier is reviewed again.
- Tighten supplier onboarding. Before the first invoice is posted, collect evidence of identity or incorporation, place of business and licensed activity, and a bank confirmation for large suppliers.
- Extend the supplier record with the date verified, the next review date, risk flags and a rolling 12-month spend total.
- Build the per-supply checks into approval. The approver confirms the business reason, the price and that the supplier is licensed for what it is billing, and the system records who approved it and when.
- Pay suppliers electronically, since electronic payment is itself one of the checks on each supply.
- File the evidence with the invoice, so it is retained as long as the record: at least 5 years for VAT, and 7 if it also supports the corporate tax return.
Employee expenses: FTA Decision No. 17 of 2026
FTA Decision No. 17 of 2026, issued on 9 September 2026, deals with VAT on costs incurred for employees. From 1 October 2026, input VAT on these categories is recoverable only if the conditions listed in the decision are met (Art. 2):
- staff transport;
- food in remote locations;
- accommodation the work requires;
- 30-day accommodation for new joiners;
- phones and data, with a documented policy and monitoring;
- business parking.
The conditions differ by category, so each should be read against the decision. In the expense process, give each category its own expense code so the VAT on it can be reviewed before it is claimed. Put the phone and data policy in writing and keep evidence that use is monitored. Hold the documents showing each condition is met with the claim, for example why accommodation was required for the work. And review recurring costs, such as staff transport contracts and accommodation leases, as well as one-off claims.
The other 1 October changes
Cabinet Decision No. 149 of 2026 amended the VAT Executive Regulation from the same date, with changes on composite supplies, the profit margin rules, financial services, input tax, capital assets and credit notes. New rules on apportioning input tax apply from the first tax year starting after 1 October 2027. Where any of these touch the business, include them in the same review.
If an input VAT claim does not hold up
Input VAT that cannot be supported makes the return incorrect. Since 14 April 2026, under Cabinet Decision No. 40 of 2017 as amended by Cabinet Decision No. 129 of 2025:
- an incorrect return costs AED 500, unless it is corrected by the filing deadline or by a voluntary disclosure with no tax difference;
- a voluntary disclosure costs 1% a month on the tax difference;
- if the FTA notifies a tax audit before the business discloses, it is a fixed 15% plus 1% a month;
- unpaid tax attracts 14% a year, applied monthly.
Where the VAT quarter ends on 30 September, or the business files monthly, the next return is due by Wednesday 28 October 2026. A late return costs AED 1,000, or AED 2,000 for a repeat within 24 months. The calendar lists the other quarter-ends.
How ebs can help
ebs Chartered Accountants runs accounts payable end to end: AP workflow setup, invoice capture and three-way matching (invoice, purchase order and delivery), supplier statement reconciliation, payment runs with authorisation workflows, employee expense processing and vendor maintenance. That is where these checks belong. Every fixed monthly package also includes VAT return submission; see VAT and corporate tax-ready books, or contact us for a free first consultation.
This article is general information as at 1 October 2026, not advice on your specific circumstances. Rules change; check the current position before acting.