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E-invoicing in the UAE to enable seamless electronic exchange between suppliers and buyers

Move will ensure compliance with the UAE Federal Tax Authority

The UAE is set to launch a comprehensive e-invoicing system in 2026, as part of its commitment to modernising and digitising the economy. E-invoicing, defined as a structured digital format for invoice data, enables seamless electronic exchange between suppliers and buyers and ensures compliance with the UAE Federal Tax Authority (FTA). Notably, invoices in PDF, Word, or scanned formats do not qualify as e-invoices under the standards established by the Ministry of Finance (MoF).

The UAE government has been actively modernising its financial and taxation systems to enhance transparency, reduce fraud and streamline business processes. This initiative reflects the UAE’s forward-looking ambition to facilitate real-time invoice exchange, enhancing efficiency in tax reporting and promoting a digitally robust economy.

The e-invoicing system aims to deliver multiple benefits, supporting the UAE’s goal of a digital, paperless economy. Its key objectives include enabling a modern and digital economy, reducing tax gaps and preventing evasion and creating a balanced business environment for businesses of all sizes, particularly benefiting micro-businesses through access to affordable digital tools.

Additional benefits include a potential 66 per cent reduction in invoice processing costs for businesses and government entities. With automation and standardisation, e-invoicing minimises errors, enhances cash flow through faster payments, and simplifies tax compliance.

Under MoF regulations, all business-to-business (B2B) and business-to-government (B2G) transactions must adopt the e-invoicing model, regardless of VAT registration status of the entities involved.

The UAE has opted for a “Decentralised Continuous Transaction Control and Exchange” (DCTCE) model, also known as the “decentralised 5-corner model,” introduced by PEPPOL (Pan-European Public Procurement Online). This international network supports secure electronic document exchange via an Accredited Service Provider, allowing businesses to connect globally with ease.

The five key stakeholders in this model are supplier (Corner 1); supplier’s accredited service provider (ASP) (Corner 2); buyer’s accredited service provider (ASP) (Corner 3); buyer (Corner 4) and the Federal Tax Authority (FTA) (Corner 5).

In this e-invoicing system, only UAE-accredited service providers may transmit relevant invoice data to the FTA’s central platform, ensuring compliance and security. Before transmission, the service providers shall validate all invoice fields against the UAE data dictionary standards.

In case of self-billing, buyers must generate the e-invoice, share it with the seller, and report to the FTA via an ASP. Businesses will need to establish agreements with accredited ASPs once the MoF releases the official list, ensuring their systems are integrated to handle e-invoicing.

For tax groups, each member must have an endpoint via a UAE Accredited Service Provider(ASP). While the group’s Tax Registration Number (TRN) must appear on invoices, endpoint details should correspond to the specific group member involved in the transaction.

In case of exports, it is not mandatory for the overseas buyer to register with a UAE Accredited Service Provider provided there is no obligation to do so as per the UAE VAT and Corporate Tax law. If the overseas customer is already registered within the PEPPOL network, the customer’s electronic address (endpoint) must be provided for transaction processing. On the other hand, if the overseas customer is not registered within the PEPPOL network, then the seller must transmit the invoice externally as in the Accredited Service Provider form via email. However, the seller’s ASP will continue to report the invoice to the FTA.

Key dates for e-invoicing implementation

The rollout of the e-invoicing system will follow a phased approach, providing businesses ample time to comply. Key milestones include:

•Q4 2024: Initiation of accreditation procedures for UAE service providers.

•Q2 2025: Completion of ASP accreditation and UAE Data Dictionary development.

•Q2 2026: Phase 1 go-live for e-invoicing reporting.

This gradual implementation allows businesses to prepare for the digital shift, fostering a seamless transition to e-invoicing across the nation. By embracing e-invoicing, the UAE is reinforcing its commitment to a transparent, efficient, and technology-driven economy.

The writer is Associate Partner, MICS International