With ongoing updates to the UAE’s tax regulations, the country continues to strengthen transparency and improve the way business transactions are managed. As UAE VAT 2026 enters a new phase of regulation, businesses are expected to prepare for requirements designed to make transactions more transparent and secure.
For business owners in the UAE, this does not necessarily mean complicated procedures. It simply requires understanding the new rules and preparing for them in advance, particularly when it comes to input tax deduction in the UAE.
What’s New in UAE VAT 2026?
Starting October 1, 2026, new rules will apply to businesses registered for VAT in the UAE, requiring them to verify suppliers and supplies before claiming input tax deductions.
In simple terms, having a valid tax invoice from a supplier will no longer be the only consideration. Businesses must also ensure that the supplier is genuine, that the supply actually took place for a clear business purpose, and that the transaction is not connected to tax evasion. Businesses should also retain evidence demonstrating that the required checks have been carried out.
The update is introduced under FTA Decision No. 13 of 2026. It does not change the VAT rate itself; rather, it establishes new procedures and requirements that businesses must consider when claiming input tax deduction in the UAE.
How Does the Decision Affect Input Tax Deduction in the UAE?
The decision establishes different levels of verification requirements depending on the value of transactions with a supplier.
Supplies valued at less than AED 10,000 may benefit from an exemption from the verification requirements. However, this exemption does not apply if the total value of supplies from the same supplier exceeded AED 100,000 during the previous 12 months, or is expected to exceed this amount during the following 12 months.
When the value of supplies from a particular supplier reaches AED 375,000 over a 12-month period, additional verification requirements apply.
This means that as the value of transactions increases, businesses have greater responsibility to maintain appropriate verification records, which can directly affect their ability to claim input tax deduction in the UAE.
What Should Business Owners in the UAE Do Before October 1?
To prepare for the new rules, businesses should review how they currently deal with suppliers and update their procurement and accounting procedures where necessary. It is also advisable to maintain a documented record of verification procedures and retain the relevant documents and information demonstrating that the required checks have been completed.
Employees responsible for procurement and accounting should also be familiar with the new requirements, so that supplier verification becomes a clear part of the company’s regular procedures rather than something addressed only during a tax audit.
Taking these steps in advance can help business owners in the UAE prepare for the new requirements and reduce the risk of issues affecting their input tax claims.
How Can HFA Help You Stay Compliant With Your Tax Obligations?
With the new rules coming into effect, maintaining accurate tax records and information is becoming increasingly important for businesses operating in the UAE.
At HFA, we help businesses prepare and file their tax returns and review the relevant tax information, helping them meet the requirements of the Federal Tax Authority and minimize errors caused by inaccurate information or late filing.
Need support with your company’s tax obligations?
Get in touch with HFA today and let our team assist you with preparing and filing your tax return.
Frequently Asked Questions
1. Does the decision change the VAT rate in the UAE?
No. The decision does not change the VAT rate. It introduces new procedures and requirements related to taxable transactions and input tax deductions.
2. Does the decision apply to all businesses in the UAE?
It applies to taxable persons registered for VAT who claim input tax deductions, subject to the scope and conditions specified in the decision.
3. Do businesses need to keep records of supplier verification?
Yes. Businesses should retain relevant records and supporting documents demonstrating that the required verification procedures have been carried out, in accordance with the decision.
4. What happens if a business does not comply with the new requirements?
Failure to meet the applicable verification requirements may affect the business’s ability to claim input tax deductions in cases covered by the decision.
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