Two UAE-specific checks belong at the front of any supplier onboarding. **Is the supplier licensed for what you are buying?** — a company may only trade in its licensed activities. And **is this a related party?** — because payments to connected persons must be at market value or they are disallowed for corporate tax.
Procurement
Buying, supplier onboarding and payment controls
Two UAE-specific checks belong at the front of any supplier onboarding. Is the supplier licensed for what you are buying? — a company may only trade in its licensed activities. And is this a related party? — because payments to connected persons must be at market value or they are disallowed for corporate tax.
| Item | Detail |
|---|---|
| Company | [COMPANY NAME], [licence] [NUMBER] |
| VAT registered | [Y/N] — TRN [NUMBER] |
| Approval limits | [Per the delegated authority matrix] |
| Purchase orders required above | AED [AMOUNT] |
| Competitive quotes required above | AED [AMOUNT] — [NUMBER] quotes |
| Standard payment terms | [30] days from a valid tax invoice |
| Supplier register held by | [ROLE] |
| Owner | [NAME], [DESIGNATION] |
| Version and date | [NUMBER], [DATE] |
1. Onboarding a Supplier
| # | Check | Why | Done |
|---|---|---|---|
| 1 | Trade licence obtained and activity list read | A supplier may only trade in what it is licensed for | [Y/N] |
| 2 | Licence currently valid | Re-check at renewal | [Y/N] |
| 3 | Is this a related party or connected person? | Arm’s length pricing and documentation required | [Y/N] |
| 4 | VAT registration and TRN verified | Needed for input tax recovery | [Y/N] |
| 5 | Bank details obtained and verified by call-back | To a number you already hold | [Y/N] |
| 6 | Beneficial ownership understood for material suppliers | Conflicts and sanctions | [Y/N] |
| 7 | Sanctions screening | At onboarding and periodically | [Y/N] |
| 8 | Insurance evidence where relevant | PI, public and product liability | [Y/N] |
| 9 | [Individual suppliers: permit to provide services] | Freelance permit or equivalent | [Y/N] |
| 10 | Data protection terms where personal data is involved | Processing agreement | [Y/N] |
| 11 | Anti-bribery terms and no candidate-fee confirmation | For agencies especially | [Y/N] |
| 12 | Added to the supplier register with an owner | [Y/N] |
1.1Check 3 catches owner-managed businesses. Buying from a company owned by the founder, a director or a relative is a related party transaction. It is permitted — but it must be at market value, documented, and approved with the interested party abstaining.
2. Buying
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A UAE company may only trade in the activities on its licence. A supplier operating outside them exposes both parties and can cause invoicing and customs problems. Obtain the licence, read the activities against what you are buying, and re-check at renewal.
Buying from a company owned by the founder, a director or a relative is a related party transaction. It is permitted but must be at market value, documented, and approved with the interested party abstaining. Owner-managed businesses miss this constantly and it is among the first things examined.
A rate that was market when the arrangement started drifts. An annual comparison against market evidence is what defends the deduction, and it is far easier than reconstructing the justification years later.
The dominant payment fraud in this market is an email changing account details on a genuine invoice. The number on the changed invoice belongs to whoever sent it. This single control prevents most of the loss.
One person adds a new payee, a different person approves. Combined with call-back verification, it is the most effective and cheapest control available against payment fraud.
Recovery requires the supplier’s TRN, the VAT amount in dirhams and the other required particulars. A card slip or a simple bill is not enough, and the VAT is lost permanently. Check at receipt, not at the VAT return.
Where services are bought from outside the UAE, the buyer accounts for the VAT itself. This is the most commonly missed VAT item in any UAE business and it repeats every period until found.
A person invoicing you for services needs a freelance permit, a Green Visa arrangement or a company licence. Engaging someone without one exposes the buyer as well as the individual. Ask for the document.
Order, receipt and invoice. Unmatched payments are where both fraud and simple error hide, and the discipline costs nothing once it is routine.
Sole source, urgency and technical necessity are legitimate reasons to skip a competitive process. Skipping it silently is what looks wrong later. Record the reason at the time.
And nobody’s purchase is approved by someone who reports to them. Where the buyer is the most senior person, nominate a second approver — self-approval at the top is the most common control gap in owner-managed companies.
Auto-renewing contracts with long notice periods are where procurement loses control. By the expiry date the renewal has already happened. Diarise the last date to give notice.
Lists change and suppliers change ownership. Screening only at onboarding is a snapshot; periodic rescreening catches the supplier that became a problem after the relationship started.
Payroll bureaux, HR platforms, IT providers and marketing agencies all handle personal data on your behalf. The written terms are required, and where the parties sit in different UAE regimes the transfer position needs addressing too.
Reflects UAE law and practice current as of {{DATE OF USE}}. Tax invoice particulars, reverse charge rules, blocked input tax categories, transfer pricing and connected person provisions, freelance permit requirements and data protection regimes all change — confirm the current position with the Federal Tax Authority or a UAE adviser.
This is a ready-to-use template provided for convenience. Laws and requirements change, and every situation is different — please have it reviewed by a qualified professional (a lawyer, corporate secretary, or accountant as relevant) before you rely on it.