FTA Decision 13 of 2026: What a DIFC Company Must Check Before It Recovers Input VAT from 1 October

A finance manager at a DIFC advisory firm asked us last week whether the new supplier rules meant she had to visit every supplier's office. Not every supplier, and not necessarily a visit. But from Wednesday the question is the right one to be asking, because for the first time the UAE VAT regime makes checking your supplier a condition of recovering the VAT on what they sold you.

FTA Decision No. 13 of 2026 was issued on 22 August and takes effect on 1 October 2026. It gives effect to Article 54(bis) of the VAT Law, and it lands in the same fortnight as the Executive Regulation amendments that also start on 1 October and the corporate tax return deadline that fell on 30 September. This note is about the decision alone: what it requires, who it catches, and what a DIFC company with a finance team of two or three should actually do.

What changed in principle

Until now, input tax recovery turned on the supply: a valid tax invoice, use for taxable supplies, payment within six months. The supplier's own standing was the supplier's problem. Decision 13 adds a second layer. Before deducting input tax, the taxable person must have verified the supplier and the supply, documented the verification, and be able to produce it. A supply that would otherwise qualify does not qualify if the checks were not done.

The FTA's stated purpose is to close the route by which fictitious or non compliant suppliers generate recoverable VAT for their customers. The effect on an honest business is a due diligence obligation it probably half performs already, now formalised, timed and evidenced.

Verifying the supplier

The supplier check is required when you deal with a supplier for the first time, and again on repeat dealings where the supplier has not been verified in the previous 12 months. That 12 month cycle is the operational heart of the decision: a supplier file is not a one off, it expires.

For a supplier that is a company:

• Confirm incorporation through an official database or a copy of the certificate of incorporation, and check the details are consistent with the invoice and the contract.
• Identify the person acting for the supplier, whether director, agent or employee, and hold a copy of their valid identity document.
• Verify the place of business exists and fits the activity, either electronically or by a field visit.

For a supplier who is a natural person: a copy of a valid Emirates ID or passport, and a meeting, in person or virtual, before the supply is made.

Two further tests sit on top. First, a risk assessment: whether the supplier changed its address or key people more than twice in the previous 12 months, and whether it has undertaken transactions out of proportion to the size and history of its business. If either indicator applies, a clear, justified explanation must be kept and given to the FTA on request. Second, a spend tier: where supplies from a supplier exceed or are expected to exceed AED 375,000 over 12 months, you must also obtain evidence of the supplier's UAE bank account and review its public information and business reputation.

Verifying the supply

Separately from the supplier, each taxable supply must be checked before the input tax on it is deducted. The decision lists what the check covers:

For a professional services firm most of these are quick: the rationale is obvious, the payment is a bank transfer to the supplier's own account, the service is what the supplier does. The point of the exercise is the file, not the difficulty. The PwC alert on the decision reads the payment test the same way we do: the arrangements that need a written justification are the unusual ones, and a company whose suppliers are all paid by transfer to their own UAE accounts has most of that test already covered.

The small value exception, and its ceiling

The decision allows the verification procedures to be disregarded for supplies below AED 10,000 excluding VAT, subject to its conditions. That takes the coffee, the courier and the stationery out of scope.

The exception has a ceiling. It does not apply where total supplies from a single supplier exceed AED 100,000 over the previous 12 months, or are expected to exceed that over the next 12. A supplier who invoices AED 9,000 a month is inside the procedures, because the annual total is not. Companies that intend to rely on the exception need the 12 month spend per supplier in front of them, which most accounting systems can produce and most finance teams have never had to look at.

Documentation: the policy the decision requires

Three record keeping obligations sit under everything above. Verify the supplier under Article 3 of the decision on first dealing and on any 12 month lapse. Verify each supply under Article 4. Document the steps and retain the supporting records so the FTA can check them. And, separately, maintain a written policy identifying who is responsible for implementing, reviewing and supervising the procedures, with their powers and responsibilities, kept with the verification records.

The policy is the item most likely to be missing on 1 October, because it is the one nobody was already doing. It does not need to be long. It needs to name people, describe the steps, set the thresholds the company applies and say where the records are kept.

Why this reaches the DIFC

VAT is federal. The DIFC's own legal system governs civil and commercial matters within the centre; it does not take DIFC companies outside the VAT Law or the FTA's decisions beneath it. A DIFC advisory firm, fund manager, family office or holding company that is registered for VAT and recovers input tax on rent, professional fees, IT and travel is a taxable person for these purposes and is inside Decision 13 from 1 October.

In our experience the DIFC company's supplier list is short and stable, which makes the exercise manageable. It is also concentrated: a handful of suppliers, typically the landlord, the auditor, the law firm and the IT provider, account for most of the recoverable VAT and will sit above the AED 375,000 tier. Those are the files to build first, because they carry both the largest input tax and the heaviest checks.

A working plan for the next fortnight

For a company that has not started, this is the order we would run it in:

1. Pull 12 month spend by supplier from the ledger, excluding VAT. Mark everything above AED 100,000 and above AED 375,000.
2. Build the supplier files for the AED 375,000 tier first: incorporation evidence, authorised person and identity document, place of business, UAE bank account evidence, a note on public information and reputation, and the two risk indicators answered.
3. Then the AED 100,000 tier, with the same file minus the bank account and reputation elements.
4. Write the policy: who verifies, who reviews, who supervises, what thresholds the company applies, where records live.
5. Change the accounts payable process so that an invoice from a new or unverified supplier cannot be posted for recovery until the file exists. That is the control that keeps the company compliant after the first push.
6. Diarise the 12 month refresh per supplier. A verification done on 1 October 2026 lapses on 1 October 2027.

Companies with revenue above AED 50 million have the e-invoicing accreditation deadline in the same period; our note on e-invoicing for DIFC and free zone companies covers how the two projects share master data.

How Atlas can help

Atlas's accounting and tax practice, delivered through the wider Atlas group, runs VAT compliance for DIFC entities and can build the supplier verification files, draft the policy the decision requires and put the accounts payable control in place before the first October VAT return. Speak with the team with your supplier list, and we will tell you which files matter and which do not.

This article is general information and does not constitute legal, tax or regulatory advice. DIFC and ADGM rules change; confirm the current position with a qualified adviser for your specific case.