A supplier sends an invoice, your team records the expense, and the VAT goes into the return. But what evidence sits behind that invoice?
For business owners, that question deserves attention before the next VAT filing. A practical supplier-checking process helps purchasing and finance teams recognise unusual arrangements and keep a clear record of their decisions.
What is KYS?
“Know Your Supplier”, or KYS, is business shorthand for supplier and supply verification. FTA Decision No. 13 of 2026, issued on 22 July 2026 and effective from 1 October 2026, prescribes checks before input VAT deduction for the purposes of Article 54(bis) of the VAT Law.
What does the decision cover?
It covers supplier identity, premises and risk indicators, plus transaction rationale, payments, pricing, licensed activities and goods ownership/origin.
Checks must be documented. A written policy assigns implementation, review and supervision responsibilities. Supplier verification applies on first dealings and recurring dealings where none occurred within the previous 12 months.
Verification exception may apply.
Small-supply exception is unavailable.
Additional UAE-bank confirmation and reliable public-information checks apply.
The thresholds concern supplier spend, not VAT registration. Ordinary input VAT recovery conditions still apply.
What additional checks apply above AED 375,000?
These checks apply when purchases from one supplier exceed AED 375,000 over the previous 12 months, or are expected to exceed it over the next 12 months. They supplement the other supplier and transaction checks.
Written confirmation from a UAE bank
Obtain a written confirmation issued by an authorised bank in the UAE confirming that the supplier holds a bank account. It must not contain relevant reservations or conditions. The confirmation does not have to be addressed specifically to your business.
An IBAN typed on an invoice or a supplier's own bank-details declaration is not the bank-issued confirmation described in the decision.
Public information and reputation review
Review and assess publicly available reviews and media coverage from reliable sources. Consider whether the information fits the supplier's business activities and size, and whether it indicates suspected tax evasion.
We recommend keeping the search date, sources reviewed, relevant screenshots or links, and a short conclusion. Where little reliable information exists, record that limitation and how it was assessed. A lack of online reviews alone does not prove wrongdoing.
Example: A contract involves expected purchases of AED 35,000 per month for 12 months. The AED 420,000 forecast triggers the additional checks without waiting for actual purchases to exceed AED 375,000.
What records should a business keep?
Start with a valid tax invoice and evidence of the actual purchase, then build the file according to the applicable verification requirements. This approach works for any business size or industry. Supplier spend and the individual supply determine the applicable checks, rather than whether the buyer is described as small or large.
The following is a practical filing checklist. It distinguishes our recommended supporting records from the specific bank confirmation and verification evidence required under the decision.
1. Purchase records for an input VAT claim
Valid tax invoice; purchase order or agreement where used; delivery note or evidence of services; payment records or agreed payment terms, as relevant; and evidence of business use and the basis for VAT recovery. We also recommend a dated FTA TRN verification record. An invoice alone does not establish entitlement to recovery.
2. Record the basis for any small-supply exception
For a supply below AED 10,000 excluding VAT, retain the supplier's previous rolling 12-month total and expected next 12-month purchases to support the exception assessment. The exception is unavailable if either total exceeds AED 100,000. We recommend dating the assessment and recording the preparer.
3. Add the supplier verification file where the exception is unavailable
Incorporation verification or certificate for a legal person, valid ID for its authorised representative, and premises verification. For a natural person, retain valid identity evidence and a record of the required in-person or virtual meeting. Document the supplier risk assessment and justified explanations for applicable indicators. A trade licence can support activity checks.
4. Add individual supply verification evidence
Document the commercial purpose, price assessment, licensed activity and payment review. Where relevant, include goods origin and ownership evidence, the intermediary's commercial role, and explanations for unusual payment arrangements. Supporting records may include contracts, delivery records and correspondence.
5. Add the enhanced file above AED 375,000
Bank-issued UAE account confirmation and the documented reliable public-information review described above, in addition to the applicable supplier and supply evidence.
6. Maintain the control records
Written verification policy and assigned responsibilities; dated checks and evidence. We recommend a renewal calendar, periodic supplier confirmations, rolling purchase totals, forecasts, system alerts and a record of exception decisions.
A single supply of AED 10,000 or more does not qualify for the below-AED-10,000 exception, even if that supplier's total remains below AED 100,000. Smaller supplies also lose that exception when the supplier's past or expected total exceeds AED 100,000.
Keep a supplier-level file for reusable evidence and link each purchase to its transaction records. This avoids asking for the same documents with every invoice while preserving evidence of the checks performed.
Recommended Approach: Steps to Gather Information and Maintain Verification
Whatever your business size or industry, supplier verification should be part of purchasing, accounting and management review. The following is our recommended operating approach, rather than a requirement to purchase a particular system.
1. Gather information at the start
Use a supplier onboarding checklist to collect the information and evidence needed for the applicable checks. Record the supplier's identity, authorised representative, business activity, premises, relevant bank evidence and contact details.
Create one supplier record linking to the supporting documents. Name the person who collected the information and the reviewer who checked it. Keep identity and bank documents in a restricted folder.
2. Obtain periodic confirmation from the supplier
We recommend scheduled confirmations to refresh the information and ask suppliers to report changes promptly. Check for changes to their licence, representative, address, business activity and payment details. Track the verification renewal date separately from document expiry dates.
A supplier's confirmation supports the review. It does not replace independent checks or the checks needed for individual purchases.
3. Make the system flag missing information and threshold changes
We recommend that the accounting or supplier-management system track both actual purchases over the previous rolling 12 months and expected purchases over the next 12 months. Use orders, contracts and purchasing forecasts to keep expectations current.
Compare those totals with the AED 100,000 and AED 375,000 tests. Also assess individual supplies against the AED 10,000 exception. An annual January-to-December total alone is insufficient for rolling-period monitoring.
The system should automatically flag suppliers whose required information is incomplete or outdated when actual or expected purchases exceed the relevant threshold. Assign each alert an owner, action date and reviewer, and escalate unresolved cases before the VAT claim is approved.
Example: Twelve expected monthly purchases of AED 9,000 total AED 108,000. Although each purchase is below AED 10,000, the forecast exceeds AED 100,000. The system should flag any gaps in the supplier's required verification evidence at the outset.
Automated alerts are our recommended control. The decision does not prescribe specific software or make the purchase of an automated system mandatory.
4. Define responsibility within the team and with the supplier
Set clear responsibilities, even where one person performs several roles. The written procedure should explain who gathers evidence, who checks it, who monitors thresholds and who approves or escalates exceptions.
Supplier's nominated contact
Provide accurate information and requested evidence, confirm details periodically and notify changes promptly.
Purchasing or supplier relationship owner
Gather information, follow up gaps and update expected purchases as orders or contracts change.
Finance or accounts payable
Check purchase and payment evidence, maintain records and monitor actual purchases and system alerts.
Designated reviewer or tax lead
Assess exceptions, challenge explanations and determine the appropriate VAT treatment.
Management or process owner
Remain accountable for implementation, resources, overdue cases and supervision.
We recommend recording supplier cooperation expectations in onboarding terms or an agreed procedure. Allocating tasks to the supplier does not transfer the purchasing business's VAT obligations.
5. Resolve exceptions and record the decision
An alert should lead to action, rather than simply changing a dashboard colour. Record what is missing, the supplier's response, the evidence considered and the reviewer's decision. Continue checking individual purchases even after supplier onboarding is complete.
For example, a familiar supplier may ask for payment into another company's bank account. Ask for the commercial explanation and supporting evidence, and document the review. The unusual arrangement warrants investigation but is not, by itself, proof of wrongdoing.
Why this matters financially
For a standard-rated purchase of AED 100,000 plus AED 5,000 VAT, rejection of the input VAT deduction could leave the business bearing the AED 5,000 VAT cost.
That is 5% of the amount before VAT, or approximately 4.76% of the AED 105,000 VAT-inclusive bill. It is not an automatic 5% penalty for missing supplier information.
Article 54(bis) concerns supplies connected with tax evasion where the buyer knew or should have known of that connection. Failing to perform the prescribed verification can expose the deduction under that framework. Supplier cooperation therefore matters commercially as well as administratively.
Illustration: turn a supplier alert into a recorded decision
Recommended control workflow. Determine required evidence using the applicable thresholds and exceptions.
How Al Kashif can help
Al Kashif Tax Consultants can help review your supplier process, identify gaps, prepare a practical checklist and policy, and integrate verification into your accounting and VAT review workflow.
Contact Al Kashif Tax Consultants to discuss your supplier verification process.
Tax done right, Business done better.
Official source
FTA Decision No. 13 of 2026 on verification before input tax deduction.
Issued 22 July 2026. FTA website publication date 20 August 2026. Effective 1 October 2026. The English PDF is labelled an unofficial translation. Checked 5 November 2026.
General business guidance. Apply the decision alongside the VAT Law and other input tax recovery conditions to your circumstances.
Additional legal reference: UAE VAT Law, Article 54(bis).
