UAE Tightens VAT Refund Rules from October 1 – What Businesses Must Verify Before Claiming

Created On: September 10, 2026
Newsletter, U.A.E.

Modified On: September 10, 2026

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Summary:

From October 1, UAE businesses will face stricter VAT refund checks linked to supplier tax compliance. Businesses must verify suppliers, review bank details, assess reputational risks, and document each purchase properly. The AED 10,000 exemption may not apply once annual spending with a supplier exceeds AED 100,000. Clear responsibility and regular supplier reviews will also be required. Businesses should review their supplier records and processes before October 1 to avoid VAT refund issues.

The Federal Tax Authority of the UAE will gain new powers from October 1 to refuse VAT refunds where purchases made by a business are linked, anywhere in the supply chain, to tax evasion. The change marks a significant shift from the current standard. A business no longer needs to have known about wrongdoing to lose its claim. If it simply failed to carry out proper supplier checks, it can now be treated as though it should have known.

Two Layers of Checks, Now Mandatory

Currently, the requirement isn’t a single form. It is split into two tiers depending on the size of the relationship.

Trigger	What’s now required
Every new supplier, and every 12 months after	Identity verification, confirmation of authorized signatories, and checking that the business actually operates from its stated address
Suppliers billing over AED 375,000 a year	Written confirmation of the UAE bank account of the supplier, along with a check of public reputation and media coverage
Every purchase, regardless of size	Evidence that the deal made commercial sense, pricing wasn’t unusual, the goods matched the supplier’s licensed activity, and cash payments are documented

Other warning signs matter too. A supplier suddenly changing its address, replacing key staff, or offering deals that seem too large for the size of the business are signals that the FTA expects companies to notice and investigate.

When the AED 10,000 Exemption Doesn’t Apply

There is a stated exemption for purchases under AED 10,000, but in reality, it disappears fast. Once total annual spend with one supplier crosses AED 100,000, roughly AED 8,300 a month, every transaction with that supplier, including the small ones, falls back under the full checking requirement. Businesses that assume small purchases are automatically safe should re-check that assumption before October.

The Checks Need Clear Ownership

The rule also requires businesses to document the people performing these checks, the reviewers involved, and the person accountable for the process overall. A one-time supplier form filed at onboarding and never revisited won’t meet that bar going forward.

One client of IMC, used the run-up to this deadline to build a structured supplier verification process well ahead of schedule. This included standardized onboarding checks, a 12-month review cycle, and clear internal sign-off at every stage. By the time the new rule takes effect, the business will already have a fully documented process in place, turning a compliance deadline into a genuine operational upgrade.

What to Do Before October 1

Businesses have a narrow window to get supplier files in order. This involves reviewing the suppliers that cross the AED 375,000 and AED 100,000 thresholds, confirming that bank verification is properly documented for the larger ones, and putting the review cycle and accountability structure in writing.

Speak to a VAT consultant in Dubai at IMC to assess where your current supplier documentation stands against the new requirement and what needs to be in place before the deadline.

Note: This newsletter is for general informational purposes only and does not constitute legal or tax advice. FTA requirements in the UAE should be verified with a qualified advisor before taking any action.

Author Bio:

Krizelle Zara Briones delivers precise, hands-on expertise across business accounting, tax, and audit compliance. She simplifies complex regulatory requirements, allowing clients to move forward with clarity and strategic confidence.

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UAE Tightens VAT Refund Rules from October 1 – What Businesses Must Verify Before Claiming

Summary:

Two Layers of Checks, Now Mandatory

When the AED 10,000 Exemption Doesn’t Apply

The Checks Need Clear Ownership

What to Do Before October 1

Author Bio:

UAE Tightens VAT Refund Rules from October 1 – What Businesses Must Verify Before Claiming

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