Mandatory VAT Supplier Verification in the UAE

This week, the UAE announces mandatory VAT checks

This week, the United Arab Emirates announced that starting October 1, 2026, all businesses will be required to verify their suppliers and the supplies received. This measure aims to combat tax evasion and ensure compliance with existing tax regulations. According to recent reporting, companies that fail to comply with these checks risk losing their right to recover VAT on affected transactions.

This initiative is part of a broader framework aimed at strengthening tax compliance in the country. Authorities are seeking to encourage transparency and reduce risks associated with tax evasion, while bolstering the UAE's reputation as a reliable business hub. As such, businesses need to prepare for these new requirements, especially those working with multiple suppliers.

Which businesses will be affected by these checks?

Mandatory VAT checks will apply to all businesses operating in the UAE, regardless of size or sector. This includes both small enterprises and large multinationals. Each business will need to ensure that its suppliers are registered for VAT and comply with tax obligations.

Businesses need to consider several elements to comply with this new regulation:

• Verification of suppliers' VAT registration.
• Review of invoices and documentation related to supplies.
• Updating accounting systems to incorporate these checks.
• Training staff on new procedures.
• Consulting with tax experts to ensure compliance.

The impact on small businesses

It is noteworthy that, alongside this announcement, the UAE has extended tax exemptions for small businesses until the end of 2029. This means small businesses with annual revenues up to 3 million dirhams will continue to benefit from tax relief, reducing their compliance burden. This measure is essential for start-ups and growing enterprises, allowing them to focus on development while adhering to the new VAT verification requirements.

How to prepare for these changes?

Businesses must now prepare for these new mandatory checks. This involves establishing robust internal processes to ensure that all suppliers meet tax compliance requirements. Companies may consider the following steps:

• Assess current suppliers and their VAT compliance.
• Adapt accounting systems to facilitate verification.
• Train staff on new regulations and procedures.
• Consult tax experts for best practice advice.

In summary, the new VAT verification regulations represent a significant shift for businesses in the UAE. While this may seem a challenge, it also presents an opportunity to enhance transparency and compliance within the country's entrepreneurial landscape. Therefore, businesses should take action now to ensure they are ready for these upcoming changes.

For any questions regarding the implications of these changes for your business, feel free to reach out to Escale Dubai's advisors.