UAE Announces New VAT Compliance Regulations Taking Effect This October

Federal Tax Authority Decision No. 13 of 2026, which becomes effective on October 1, 2026, is set to comprehensively transform how your business manages VAT compliance. This update impacts supplier invoicing management and carries specific financial consequences if you fail to properly implement, continuously control, and respond to requests. First, consider the new supplier verification requirements, which apply to two distinct types of suppliers.

The first category includes natural persons who are registered for VAT. For instance, if your office floor landlord charges Dh500,000 ($136,120) annually and is an individual whose earnings exceed the VAT registration threshold, they must register and levy the tax. Before claiming the VAT charged, you are now required to meet this individual in person or virtually and obtain a copy of their identity proof, such as a passport or Emirates ID. Although not explicitly stated, these documents should presumably be current when reclaiming VAT input.

The second category involves dealing with licensed companies, where you must verify legal incorporation. A copy of a certificate of incorporation is sufficient because it never expires, making it the optimal document to retain. Alternatively, other official databases may be utilized, though none are specifically listed as examples. This documentation confirms a supplier's name and address against their provided trade licence. Notably, the regulations mention employees and other related details. Trade licences typically display the managing personnel and occasionally some or all shareholders. Because these details can change, you rely entirely on your supplier to update this information promptly with the relevant trade licence-issuing authority and forward the updated document to you, presenting a notable challenge for larger organizations.

Furthermore, you must verify the identity of the person representing the supplier using a passport or Emirates ID. The language implies that the representative must be officially empowered to act on behalf of the supplier, effectively narrowing the pool of authorized individuals to those capable of contracting for them. Consequently, you might also require confirmation of shareholdings, a notarized power of attorney, or board resolutions.

Another mandated task is reviewing and identifying risks associated with each supplier. This involves three key challenges: if a supplier—or the specific individual your business interacts with—has changed offices more than twice within a 12-month period, or if the volume and nature of their business experiences a material change, you must clearly document and justify why this poses no concern. You may need to present this documentation during an audit by the relevant authority.

Additionally, you must verify that each supplier from whom you plan to reclaim VAT maintains a bank account, provided the annual purchase value exceeds the VAT registration threshold or is expected to do so over the subsequent 12 months. This verification is accomplished by obtaining a bank confirmation letter from the supplier's bank, which does not need to be addressed directly to your business. You must also scan publicly available media to investigate whether your supplier is trading consistently with your expectations. If a supplier requests payment to a bank located outside the UAE, you must retain evidence establishing a reasonable commercial justification. Cash payments should be avoided entirely unless there is a documented, commercially justifiable reason. While the legislation mentions thresholds, specific bandwidth details remain unavailable. Ultimately, you must ensure that both the purchase price and the achieved margin represent fair market values. You must also verify that the supplier holds the appropriate authorization on their trade licence to sell the purchased goods and services and possesses proper title to them. Finally, an internal team member must be appointed to oversee these responsibilities. Purchases under Dh10,000 before VAT are exempt from these guidelines unless their cumulative total exceeds Dh100,000 over any 12-month period.