What the decision is
FTA Decision No. 13 of 2026 sets the measures, procedures and conditions a taxable person must follow to verify the validity and integrity of supplies before deducting input tax. The Federal Tax Authority issued it on 22 July 2026. It applies from 1 October 2026.
Businesses call it Know Your Supplier, or KYS, because it works like the Know Your Customer checks banks already run.
The law behind it
The decision puts Article 54 bis of the VAT law into practice. That article was added by Federal Decree-Law No. 16 of 2025 and has been in force since 1 January 2026. It deals with supplies that form part of a chain connected with tax evasion:
- If you knew about the connection, the FTA rejects the input VAT.
- If you should have known, the FTA may reject it.
- If you did not verify the supply in the way the decision sets out, you are treated as someone who should have known.
So the checks are your evidence. With them on file, you can show you took the steps the law expects.
Who it applies to
Every taxable person that deducts input VAT. There is no exception for small businesses or for particular sectors. Free zone and mainland businesses are treated alike. Advisers read the decision as covering imports and reverse-charge purchases too.
Supplier checks
Verify each supplier before the first supply, and again when 12 months have passed since the last check.
- Identity. For a person, a copy of a valid Emirates ID or passport and a meeting in person or by video. For a company, incorporation confirmed against official records or its certificate, and the identity of its authorised signatory.
- Place of business. Confirm, electronically or by a visit, that the supplier has a real place of business that fits its activity.
- Risk indicators. Check whether the supplier changed its address more than twice in 12 months, changed key staff more than twice in 12 months, or trades at a scale out of proportion to its size and history. If so, keep a written, reasoned explanation.
- Bank and reputation. Where purchases from the supplier pass AED 375,000 in 12 months, get written bank confirmation of its account and review public information and media coverage for signs of tax evasion.
Checks on each supply
For every taxable supply above the small-supply exception, confirm that:
- there is a genuine commercial reason for the deal
- the payment terms and method make commercial sense
- payment is made by electronic means, or cash is backed by a documented reason and stays within legal limits
- the price and margin are in line with the market
- the goods or services fall within the supplier's licensed activity
- for goods, the origin and the supplier's right to sell them can be shown
- any intermediary in the chain has a clear commercial role
Thresholds
Three amounts decide how deep the checks go: AED 10,000 per supply, and AED 100,000 and AED 375,000 per supplier over 12 months. See the thresholds explained, with a calculator.
Policy and records
You need a written verification policy that names who carries out the checks, who reviews them and who supervises, with their powers and responsibilities. Keep the supporting documents for every check in a form the FTA can review. See what the policy must cover.
What is still unclear
- The decision has no transitional rules. It does not say how to treat a supply received before 1 October 2026 and deducted after it.
- It does not say from which date the 12-month totals are counted.
- The cash threshold referred to in a September 2026 Cabinet decision has not been published.
Until the FTA clarifies these points, the careful route is to verify every active supplier now.