The 2026 UAE VAT Amendments: Two Reliefs, a Deadline, and a Supplier-Verification Duty from 1 October

Federal Decree-Law No. 16 of 2025 amended the VAT Law with effect from 1 January 2026. Two of its three changes are straightforward and were widely reported. The third has been treated as a footnote, and it is the one that creates work.

The first is relief. The second is a clock that starts without anyone doing anything. The third has now been given operative detail by FTA Decision No. 13 of 2026, which takes effect on 1 October 2026 and is the reason this article is mostly about the third.

Change one: no more self-invoices under the reverse charge

Under the reverse charge, the recipient accounts for the VAT instead of the supplier. The practice had been to raise a self-invoice documenting that self-charge. That requirement is gone.

What has not gone is the evidence. The Ministry's announcement is explicit that taxable persons remain required to retain the supporting documents related to the supply transactions. The document that proves the transaction moves from one you create to one you keep — the supplier's own invoice, and the import documentation where goods are involved.

For most businesses this removes a step rather than a control. The reporting on the VAT return is unchanged; only the paperwork behind it is simpler.

Change two: an excess VAT credit is no longer open-ended

This is the change with a cash consequence, and it is easy to miss because nothing happens on the day it bites.

Article 74 of the VAT Law governs excess Recoverable Tax. Where recoverable input tax exceeds output tax for a period, the taxable person may apply to recover it; the Authority may offset it against payable tax or penalties; and — in the text as it stood before this amendment — "if no request is submitted to recover the excess after offsetting, the excess Recoverable Tax will be carried forward to the subsequent Tax Periods." No end date.

The amendment adds one. There is now a five-year time limit for submitting a request to reclaim excess refundable tax after reconciliation, and the Ministry's own wording is that once the period elapses, the right to reclaim the tax expires.

A business carrying a credit balance because it exports, sells zero-rated supplies, or has spent heavily on capital projects has therefore moved from an open position to a dated one. The balance sitting in EmaraTax is the thing to look at, and the question to ask is how old each layer of it is.

The transitional window: claim or offset by 31 December 2026

There is a deadline of 31 December 2026 attached to this change, and it is the most actionable date in the whole update. It does not come from the VAT Law.

It sits in Article 3 of Federal Decree-Law No. 17 of 2025, which amended the Tax Procedures Law and was issued on 1 October 2025 with effect from 1 January 2026. Article 38 of the Tax Procedures Law, as that Decree-Law amends it, now requires a refund application to be submitted within five years from the end of the relevant Tax Period — and Article 38(6) states that where an application is not submitted within the deadlines, the right to claim the refund or the credit balance lapses.

The Decree-Law expresses the window as a period of one year running from its effective date of 1 January 2026, which puts the last day at 31 December 2026. Work to that date. A balance not claimed or applied by then has no further route back.

The relief is also wider than a refund. Article 3(1) expressly allows the balance to be used in payment of Tax liabilities or Administrative Penalties, which is often the faster route and avoids a repayment application altogether.

The window carries a two-year audit tail

This is the part with a genuine cost attached, and it is almost entirely absent from the published coverage.

Article 3(3) of the same Decree-Law disapplies the ordinary limitation in Article 46 for anything claimed in this window: the Authority may conduct a Tax Audit or issue a Tax Assessment in relation to a refund application submitted during that year, provided the audit is completed or the assessment issued within two years of the application. Article 3(2) makes a matching exception for the Taxpayer, allowing a Voluntary Disclosure in respect of such an application within two years, unless the Authority has already decided.

So reviving an old balance reopens it. A claim made in late 2026 on a period from 2019 can be audited into late 2028, on a period that was otherwise closed. For a clean, well-evidenced balance that is simply the price of collecting it. For a balance nobody has reconciled in six years, the arithmetic deserves doing before the application goes in rather than after.

Change three: Article 54 bis, and why it is different

The third amendment allows the Authority to deny an input tax deduction where it determines that the supply forms part of a tax-evasion arrangement. Stated at that level it sounds like an anti-fraud provision aimed at people committing fraud.

It is not, quite. The exposure falls on the recipient — a business that paid a real invoice for a real supply and recovered the VAT in the ordinary way, but whose supplier turns out to sit inside a chain that the Authority later characterises as evasion. The question then becomes what that business did to check.

FTA Decision No. 13 of 2026 answers that question. Its Article 2 states that it applies, for the purposes of Article 54 bis of the VAT Law, to taxable persons in relation to the verification of the validity and integrity of the supplies they receive before deduction of input tax.

FTA Decision No. 13 of 2026 — the part with a date on it

Verifying the supplier

Article 3 requires four things, and they are cumulative rather than alternatives.

• Identity. For a natural person: a copy of valid proof of identity — Emirates ID or passport — and a meeting, in person or virtually, before the supply is made. For a legal person: verification of incorporation through official databases or a copy of the certificate of incorporation, with the details matching the entity's name, address and employees, plus proof of identity of the director, agent or employee authorised to represent it.
• Address and place of business. Verify that an actual place of business exists, by appropriate electronic means or a field visit, and that it is compatible with the nature of the activities carried out.
• Risk indicators. Confirm that none of three applies — the supplier changing its address more than twice in the previous twelve months, changing key employees more than twice in the previous twelve months, or undertaking transactions disproportionate or unexpected in volume, value or nature against the size and history of its business.
• Banking and reputation, above a threshold. Where supplies from that supplier exceed AED 375,000 over the previous twelve months or are expected to over the next twelve, obtain a written confirmation from an authorised bank in the State that the supplier holds a bank account, with no reservations or conditions attached, and review publicly available reviews and media coverage from reliable sources.

The risk indicators are not a bar on dealing with the supplier. Where one applies, Article 3(3)(b) requires the taxable person to retain a clear and justified explanation and produce it to the Authority on request, provided the explanation does not contradict the evidence available. The obligation is to notice and to document, not to refuse.

The bank confirmation is worth reading closely. It must come from a bank in the State and must carry no reservations — and the Decision notes it need not be issued to the recipient of the supply, so a confirmation the supplier already holds can serve.

Verifying the supply

Article 4 turns to the transaction itself, and this is where the Decision reaches into commercial judgement.

• A general assessment of the conditions of the transaction, and confirmation that the supplier's engagement rests on genuine commercial reasons.
• Payment terms that are justifiable commercially. Where a third party is involved in making or receiving payment, or payment goes to a bank account outside the supplier's country of incorporation, there must be a reasonable commercial explanation that does not contradict the available evidence.
• Payment by electronic means. Cash requires a documented commercial reason, must sit within the thresholds in the applicable tax legislation, and must be easily verifiable.
• Prices and margins that are not commercially unjustifiable or significantly out of line with market conditions without a clear reason.
• Supplies that fall inside the supplier's ordinary activity and inside what its commercial licence permits.
• Verification of the authenticity and origin of goods received, and of the supplier's ownership or right to dispose of them.
• Where the supplier acts as an intermediary, a clear and justifiable commercial explanation for its role in the supply.

The procedural obligations most coverage will skip

Article 5 sets out what must actually be done, and two of its four clauses create standing obligations rather than one-off checks.

1. Verify the supplier under Article 3 when dealing with them for the first time — and again on recurrent dealings where the supplier has not been verified in the previous twelve months. Verification has a shelf life of a year.
2. Verify each taxable supply received or accepted under Article 4. This one is per supply, not per supplier.
3. Document the verification steps taken and retain supporting documents and records, so the Authority can verify they were carried out correctly.
4. Maintain a documented policy identifying the persons responsible for implementing, reviewing and supervising the verification procedures, setting out their powers and responsibilities clearly, and retained at the designated location for keeping records.

That fourth clause is the one to act on first. It is not satisfied by doing the checks well. It requires a written policy, with named responsibilities, kept where the records are kept.

The thresholds, and what they mean in practice

The interaction between the first two is the part that will catch people. A business might reasonably read the AED 10,000 figure as meaning that small invoices are outside the regime. Article 6(2) removes that reading for any supplier it deals with regularly: once the running twelve-month total with that supplier passes AED 100,000, every supply from them needs verifying, including the ones for a few hundred dirhams.

AED 100,000 over twelve months is roughly AED 8,300 a month. A great many routine suppliers clear it. The practical test is not the size of the invoice in front of you but the size of the relationship behind it.

Note also that both the AED 100,000 and AED 375,000 tests are forward-looking as well as backward-looking — they bite where the amount is expected to be exceeded over the next twelve months, which means a new supplier on a large contract is inside the higher tier from the first invoice.

Where the published sources currently stand

A note on sourcing, because it affects how much weight to put on any account of these amendments, including this one.

As at the date of writing, the consolidated VAT Law published by the Federal Tax Authority still runs to Federal Decree-Law No. 16 of 2024. It does not yet incorporate Federal Decree-Law No. 16 of 2025, and no consolidated text carrying the amended Article 74 or the inserted Article 54 bis has been published on either the FTA or Ministry of Finance site.

Three things can be read directly, and between them they carry most of what matters. FTA Decision No. 13 of 2026 cites Article 54 bis by name and sets out the verification obligations in full — everything in this article about that duty comes from the Decision itself. The consolidated Tax Procedures Law published on 3 December 2025 carries Article 38 as amended, together with the Article 3 transitional provisions of Federal Decree-Law No. 17 of 2025 printed as footnotes — which is where the five-year refund limit, the one-year revival window and the two-year audit tail are stated. And the Ministry's own announcement states the three VAT changes and the 1 January 2026 commencement.

What is not yet available is the amended VAT Law itself. The self-invoicing relief and the wording of the amended Article 74 rest on the Ministry's announcement rather than on statutory text, and are described that way above. If you see either quoted as legislation, ask which document it was quoted from.

What to do before 1 October

1. Pull a supplier list with rolling twelve-month totals. That single report tells you which suppliers sit above AED 100,000 and which above AED 375,000, and therefore who needs what.
2. Write the Article 5(4) policy. Name who runs the checks, who reviews them, who supervises, and where the file lives. This is the only obligation that cannot be satisfied retrospectively by good behaviour.
3. Build the supplier file for the top tier first — identity, incorporation, place of business, bank confirmation, and the reviews check.
4. Set the twelve-month re-verification reminder. Verification lapses; a supplier cleared in October 2026 needs clearing again in October 2027.
5. Move any remaining cash payments to electronic means, or document the commercial reason and confirm the amount sits within the legislated thresholds.
6. Separately, and now: age your excess VAT credit balance in EmaraTax and identify the oldest layer. Anything already past five years has to be claimed or applied against liabilities by 31 December 2026, and that window does not reopen.
7. Stop issuing self-invoices under the reverse charge, and make sure the supplier invoice and import documentation are being retained in their place.