𝗞𝗻𝗼𝘄 𝗬𝗼𝘂𝗿 𝗦𝘂𝗽𝗽𝗹𝗶𝗲𝗿 – 𝗛𝗼𝗹𝗱𝗶𝗻𝗴 𝗮 𝗧𝗮𝘅 𝗜𝗻𝘃𝗼𝗶𝗰𝗲 𝗜𝘀 𝗡𝗼 𝗟𝗼𝗻𝗴𝗲𝗿 𝗘𝗻𝗼𝘂𝗴𝗵

𝗛𝗼𝗹𝗱𝗶𝗻𝗴 𝗮 𝗧𝗮𝘅 𝗜𝗻𝘃𝗼𝗶𝗰𝗲 𝗜𝘀 𝗡𝗼 𝗟𝗼𝗻𝗴𝗲𝗿 𝗘𝗻𝗼𝘂𝗴𝗵: 𝗪𝗵𝘆 𝗨𝗔𝗘 𝗩𝗔𝗧 𝗥𝘂𝗹𝗲𝘀 𝗔𝗿𝗲 𝗚𝗲𝘁𝘁𝗶𝗻𝗴 𝗦𝘁𝗿𝗶𝗰𝘁𝗲𝗿

​For years, claiming back VAT (Input Tax) on business purchases in the UAE was relatively straightforward: if you had a valid tax invoice in your records, you were generally good to go.

​Starting 𝗢𝗰𝘁𝗼𝗯𝗲𝗿 𝟭, 𝟮𝟬𝟮𝟲, that paper invoice alone will no longer protect your tax claims. Under new Federal Tax Authority (FTA) rules (Decision No. 13 of 2026), the 𝗯𝘂𝗿𝗱𝗲𝗻 𝗼𝗳 𝗽𝗿𝗼𝗼𝗳 𝗵𝗮𝘀 𝘀𝗵𝗶𝗳𝘁𝗲𝗱 𝘁𝗼 𝘁𝗵𝗲 𝗯𝘂𝘆𝗲𝗿. Businesses are now legally required to perform basic 𝗯𝗮𝗰𝗸𝗴𝗿𝗼𝘂𝗻𝗱 𝗰𝗵𝗲𝗰𝗸𝘀 on their 𝘃𝗲𝗻𝗱𝗼𝗿𝘀 and purchases before deducting VAT.

𝗪𝗵𝗮𝘁 𝗗𝗼𝗲𝘀 𝗧𝗵𝗶𝘀 𝗠𝗲𝗮𝗻 𝗶𝗻 𝗣𝗹𝗮𝗶𝗻 𝗘𝗻𝗴𝗹𝗶𝘀𝗵?

​The tax authority is introducing a “𝗞𝗻𝗼𝘄 𝗬𝗼𝘂𝗿 𝗦𝘂𝗽𝗽𝗹𝗶𝗲𝗿” framework. To claim back VAT on your expenses, your finance team must perform two levels of basic due diligence:

​𝗩𝗲𝗿𝗶𝗳𝘆 𝘁𝗵𝗲 𝗦𝗲𝗹𝗹𝗲𝗿: Confirm who you are buying from. Is the business registered and legitimate? Do they have a real physical office or place of business? For major vendor relationships (over AED 375,000), you must even obtain a written confirmation from their bank.

​𝗩𝗲𝗿𝗶𝗳𝘆 𝘁𝗵𝗲 𝗗𝗲𝗮𝗹: Confirm the purchase makes commercial sense. Are the prices market-appropriate? Are payments handled through proper electronic bank transfers rather than unjustified cash or offshore arrangements?

​𝗔𝗿𝗲 𝗦𝗺𝗮𝗹𝗹 𝗣𝘂𝗿𝗰𝗵𝗮𝘀𝗲𝘀 𝗘𝘅𝗲𝗺𝗽𝘁?

​Yes, there is a practical threshold:

​𝗨𝗻𝗱𝗲𝗿 𝗔𝗘𝗗 𝟭𝟬,𝟬𝟬𝟬: Single invoices below this amount are exempt from these extra background checks.

​𝗧𝗵𝗲 𝗔𝗘𝗗 𝟭𝟬𝟬,𝟬𝟬𝟬 𝗖𝗮𝘁𝗰𝗵: However, if your 𝘁𝗼𝘁𝗮𝗹 𝗽𝘂𝗿𝗰𝗵𝗮𝘀𝗲𝘀 𝗳𝗿𝗼𝗺 𝘁𝗵𝗮𝘁 𝘀𝗮𝗺𝗲 𝘃𝗲𝗻𝗱𝗼𝗿 cross AED 100,000 over a 12-month period, full background checks kick in regardless of the invoice size.

​𝗪𝗵𝘆 𝗬𝗼𝘂 𝗖𝗮𝗻’𝘁 𝗜𝗴𝗻𝗼𝗿𝗲 𝗧𝗵𝗶𝘀

​If you fail to perform and document these checks and your vendor turns out to be non-compliant or involved in tax fraud, the FTA can treat your business as someone who “should have known”. As a result, the authority can deny your VAT refund claim entirely, and a valid tax invoice will not save it.

​𝗪𝗵𝗮𝘁 𝗕𝘂𝘀𝗶𝗻𝗲𝘀𝘀𝗲𝘀 𝗦𝗵𝗼𝘂𝗹𝗱 𝗗𝗼 𝗡𝗼𝘄

​𝗨𝗽𝗱𝗮𝘁𝗲 𝗩𝗲𝗻𝗱𝗼𝗿 𝗢𝗻𝗯𝗼𝗮𝗿𝗱𝗶𝗻𝗴: Don’t wait until October. Update your procurement procedures to collect identity and business proof before issuing purchase orders.

​𝗗𝗼𝗰𝘂𝗺𝗲𝗻𝘁 𝘁𝗵𝗲 𝗖𝗼𝗺𝗺𝗲𝗿𝗰𝗶𝗮𝗹 𝗟𝗼𝗴𝗶𝗰: Keep clear records showing why a vendor was chosen and how payments were settled.

​𝗔𝘀𝘀𝗶𝗴𝗻 𝗥𝗲𝘀𝗽𝗼𝗻𝘀𝗶𝗯𝗶𝗹𝗶𝘁𝘆: Establish a written internal policy designating who in your company is responsible for verifying vendors.

​Moving forward, recovering VAT won’t just be an accounting exercise, it will require showing that your business exercised reasonable care in choosing who it deals with.

𝗪𝗲 𝗮𝗿𝗲 𝗷𝘂𝘀𝘁 𝗮𝗻 𝗲𝗺𝗮𝗶𝗹 𝗮𝘄𝗮𝘆 𝘁𝗼 𝗵𝗲𝗹𝗽 𝘆𝗼𝘂 𝘄𝗶𝘁𝗵 𝗩𝗔𝗧 𝗵𝗲𝗮𝗹𝘁𝗵-𝗰𝗵𝗲𝗰𝗸 𝗮𝗻𝗱 𝗮𝗹𝗹 𝗼𝘁𝗵𝗲𝗿 𝘁𝗮𝘅 𝗿𝗲𝗹𝗮𝘁𝗲𝗱 𝘀𝘂𝗽𝗽𝗼𝗿𝘁: 𝘁𝗮𝘅@𝗲𝗺𝗸𝗮𝘆𝘂𝗮𝗲.𝗰𝗼𝗺

Disclaimer: The information provided in this article is for general informational purposes only and does not constitute professional tax, legal, or financial advice. The views expressed are entirely personal and do not reflect the official stance of any affiliated organizations. Businesses must obtain independent professional advisory services tailored to their specific corporate structures and transactions before acting on any matters discussed herein.