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Two decisions of the UAE Federal Tax Authority (FTA), both effective from 1 October 2026, change what a business must do before it recovers input VAT. FTA Decision No. 13 of 2026 sets out the checks a business must make on its suppliers and on each supply. FTA Decision No. 17 of 2026 sets out when VAT on goods and services provided free to employees can be recovered.
Decision No. 13 of 2026: verifying suppliers and supplies
The decision was issued on 22 July 2026 under Article 54(bis) of Federal Decree-Law No. 8 of 2017 on VAT. It applies to every taxable person, before deducting input tax on supplies received.
Checks on the supplier
| Check | What is required |
|---|---|
| Identity | For an individual: a copy of a valid Emirates ID or passport, and meeting the supplier in person or virtually before the supply. For a company: verify incorporation through official databases or the certificate of incorporation, and the identity of the person representing it. |
| Place of business | Confirm an actual place of business exists, electronically or by a visit, and that it fits the supplier's activities. |
| Risk indicators | Check whether the supplier changed its address, or its key people, more than twice in the past 12 months, or made transactions out of proportion to its business. If an indicator applies, keep a clear, justified explanation to give the FTA on request. |
| Larger suppliers | Where supplies from the supplier exceed AED 375,000 in the past 12 months (or are expected to in the next 12), obtain a written confirmation from a UAE bank that the supplier holds an account, and review publicly available reviews and media coverage. |
Checks on each supply
- The supplier's involvement in the transaction rests on genuine commercial reasons.
- Payment terms make commercial sense. Payments through third parties, or to a bank account outside the supplier's country of incorporation, need a reasonable explanation. Payment should be electronic; cash needs a documented reason and must be within legal limits.
- Prices and margins are not significantly out of line with the market without a clear reason.
- The goods or services fall within the supplier's ordinary and licensed activities, and the origin and ownership of goods are verified.
- Where the supplier acts as an intermediary, its role has a clear commercial explanation.
Procedures and exceptions
- Verify a supplier on first dealing, and again if it has not been verified in the past 12 months; verify every taxable supply received.
- Document the steps taken and keep the supporting records.
- Maintain a documented policy naming who implements, reviews and supervises the checks.
- Supplies with consideration below AED 10,000 (excluding VAT) are exempt from the checks — unless total supplies from that supplier exceed AED 100,000 in the past 12 months, or are expected to in the next 12.
Decision No. 17 of 2026: VAT on employee expenses
Issued on 9 September 2026, this decision applies where goods or services are provided to employees free of charge under a contract or documented policy. Input tax can be recovered in six cases, each with conditions:
| Expense | Main conditions |
|---|---|
| Transport | Only between home and work or client sites, or for job duties; no personal use; no option to take a cash allowance instead |
| Food and drink | Employee lives in a remote or isolated area with no reasonable alternative; linked to the work period; no cash alternative |
| Accommodation | Required by the nature of the work; not part of ordinary pay; for the employee only (except where they must live permanently near the work site); commensurate with the job; no cash alternative |
| Accommodation for new employees | Temporary, for no more than 30 days, and commensurate with the job |
| Mobile phones, airtime, data and home internet | Needed for the job; personal use incidental; a documented usage policy and reasonable monitoring |
| Parking fees | Solely for business purposes; a documented reimbursement policy; receipts kept |
What to do now
- Write and approve a supplier verification policy, naming the people responsible
- Add verification fields to the supplier master: ID, licence, premises check, risk indicators and bank confirmation
- Flag suppliers above AED 375,000 and AED 100,000 a year, and schedule annual re-verification
- Review payment routes: third-party payments, foreign accounts and cash
- Review employee benefit policies and contracts against the six cases, and stop claiming VAT on benefits that do not qualify
- Keep the evidence where the FTA can inspect it
Our taxation practice drafts verification policies and reviews input tax positions, and our accounting practice sets up the supplier-master and record-keeping controls. See also our UAE Corporate Tax and VAT guide. Book a consultation.
The FTA publishes these decisions with an unofficial English translation; the Arabic text prevails.
Official sources
- Federal Tax Authority — Decision No. 13 of 2026 on measures, procedures and conditions for verifying supplies before deducting input tax (effective 1 October 2026)
- Federal Tax Authority — Decision No. 17 of 2026 on cases and conditions for recovering input tax on employee expenses (effective 1 October 2026)
- Federal Tax Authority — Legislation
Frequently asked questions
Do UAE businesses have to verify suppliers before claiming input VAT?
Yes, from 1 October 2026. FTA Decision No. 13 of 2026 requires checks on the supplier's identity, place of business and risk indicators, a bank confirmation for suppliers above AED 375,000 a year, checks on each supply, documentation and a written policy. Purchases under AED 10,000 are exempt unless the supplier's total exceeds AED 100,000 a year.
Can I recover VAT on staff accommodation in the UAE?
Only in the cases set out in FTA Decision No. 17 of 2026 — for example where the work requires the employee to live near the site, the accommodation is not part of ordinary pay, there is no cash alternative and it is commensurate with the job — or temporary accommodation of up to 30 days for new employees.
This guide is general information based on the law as we understand it on the date shown, not advice for your situation. Tax rules change often — please speak to us before acting on it. See our disclaimer.