Tax Invoices in UAE: Key Obligations Businesses Must Know

As per the UAE VAT Law, a tax invoice is a document made in written or electronic form, which records the occurrence and details of a taxable supply.  Article 65 of the VAT Law stipulates the tax registrants making taxable supplies to issue an original Tax Invoice and deliver the same to the recipients of goods and services. A tax invoice must be issued by all tax registrants on taxable supplies to other registrants, where the provisions surpass AED 10,000.

The businesses are liable to pay administrative penalties for failing to issue tax invoices. The UAE VAT Law has prescribed certain conditions for issuing tax invoices. Businesses must stringently follow those conditions to avoid VAT administrative penalties in the UAE. More details can be gathered from VAT consultants in Dubai. Meanwhile, read ahead to know about the issuance of invoices in the UAE:

Conditions for Issuing Tax Invoices in the UAE 

As per Article 59 of the Executive Regulations, the taxable persons must meet certain conditions for issuing a tax invoice. VAT consultants in Dubai can help businesses with the issuance of tax invoices. The businesses are required to abide by the following tax invoice obligations in the UAE:

  1. Businesses must issue a tax invoice under VAT in the UAE in all cases where a supply is made. The tax invoice must be issued and delivered to the recipient. It includes the supplies that meet the conditions for the issuance of a simplified tax invoice
  2. If the businesses issue a simplified tax invoice, they are not required to show the net value (the amount excluding the tax) for line items
  3. If a business issues a full tax invoice, it must show the tax value and net value for line items. However, it is not mandatory to show the gross value
  4. If businesses are issuing tax invoices in a foreign currency, it is mandatory to  show the tax amount converted to AED and the exchange rate used for the conversion
  5. Line items, on a tax invoice, must be rounded to the nearest Fils

Issuance of a Simplified Tax Invoice under VAT in the UAE 

In specific cases, the Federal Tax Authority allows the contents of the tax invoice to have less information than normal situations. Such invoices are called simplified tax invoices in the UAE and they are allowed under Article 59(5) of the Executive Regulations. A simplified tax invoice can be issued under the following circumstances:

  • If the recipient of the goods is not registered for VAT in the UAE
  • If the recipient of the goods or services is a VAT registrant and consideration for the supply is AED 10,000 or less

Mandatory Content Requirements for a Simplified Tax Invoice 

The FTA has laid out specific conditions regarding the contents of simplified tax invoices in the UAE. VAT consultants in Dubai can help the businesses to ensure they comply with the FTA requirements. As per Article 59(2) of the Executive Regulations, businesses must ensure to include the following in the simplified tax invoices:

  1. The word tax invoice must be clearly shown on tax invoices in the UAE
  2. It should contain the name, address tax registration number of the supplier
  3. The invoice must clearly show the date of issuance of the tax invoice
  4. It must include the description of the goods or services supplied
  5. The tax invoice must contain total consideration and the tax amount charged

Contents of a Full Tax Invoice in the UAE 

In normal conditions, businesses are required to issue a full tax invoice. The contents of a full tax invoice should include the following details:

  1. A clear display of the word Tax Invoice
  2. Name, address, and tax registration number of the supplier
  3. Name, address, and tax registration number of the tax registered recipient
  4. Sequential tax invoice number
  5. Date in which the invoice has been issued
  6. Date of supply
  7. A description of the goods or services
  8. Gross amount payable in AED

Administrative Penalties Related to Tax Invoices 

Failing to comply with tax invoice requirements is punishable by the UAE Tax Procedures Law. As per article 25 (o) of Federal Law No. (7) of 2017 on Tax Procedures, a penalty of AED 5,000 will be imposed if businesses fail to issue a tax invoice while making any supply. A penalty of AED 5,000 will be imposed on businesses that fail to meet the conditions and procedures regarding the issuance of electronic Tax Invoices in the UAE. VAT consultants in Dubai can help businesses to avoid penalties.

Hire the Best VAT Consultants in Dubai, UAE 

Hefty penalties will be incurred if the businesses fail to issue tax invoices but VAT consultants in Dubai such as Jitendra Chartered Accountants (JCA) can help you avoid the fines. JCA is one of the leading tax agents in the UAE approved by the FTA. We have a qualified team who can help you meet requirements such as UAE VAT registration, VAT deregistration, VAT compliance / VAT Return, excise tax services, and services related to VAT reconsideration etc.