UAE: New e-invoicing system to simplifying tax reporting, business transactions

The Ministry of Finance's (MoF) announced legislative updates and introduced an e-invoicing system in the UAE. New system will benefit businesses and government agencies by making invoicing easier, more standardised, and automated. It will allow for quick invoice exchanges and ensure smooth tax reporting to the Federal Tax Authority (FTA).

The UAE's e-invoicing system will use a five-corner model where sellers and buyers can share invoices through Accredited Service Providers (ASPs). These ASPs will securely send tax invoice data to the FTA, improving tax compliance.

These legislative updates reflect the government's commitment to digital innovation and enhancing the efficiency of the national economy.

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Federal Decree-Law No. 17 of 2024 on tax procedures introduces a definition for the "e-invoicing system" and grants the Minister of Finance the authority to issue the necessary decisions to implement the system, determine its effective dates, and specify the requirements and entities subject to it.

Federal Decree-Law No. 16 of 2024 on VAT introduces broader changes, expanding the definitions of "tax invoice" and "tax credit note" to include electronic invoices. It also adds new definitions for electronic invoices and electronic credit notes.

The amendments further confirm that VAT refunds will be based on e-invoicing compliance requirements, where applicable. Businesses subject to the e-invoicing system, in line with the phased roll-out strategy, will be required to issue invoices and credit notes electronically and archive electronic invoice data to meet record-keeping standards.

Further details regarding businesses and transactions subject to the e-invoicing system, as well as implementation timelines and dates, will be announced through upcoming decisions.