Tax Invoices: What are the Key Requirements Businesses Should Know?

A UAE business that makes taxable supplies issue an original tax invoice and delivers it to the recipient of goods or services subject to the laws of UAE VAT Law. Under the VAT law in UAE, a Tax Invoice has to be issued by all registrants for assessable supplies to other registrants, where the provisions surpass AED 10,000. The Federal Law Number (8) of 2017 on VAT has set out the requirements regarding the tax invoice along with the Executive Regulation Number 46 of 2020 and 52 of 2017 and the taxable businesses are required to follow the regulations while issuing the tax invoice.

Related: Know About Tax Credit Notes to Stay on the Right Side of UAE VAT Law

Failing to adhere to the VAT Law while issuing the Tax Invoice could lead to administrative penalties, but the best VAT consultants in the UAE provides expert guidance on the TAX Invoice prerequisites. Here is an introduction to the Tax Invoice and the legalities that the VAT registrants must follow:

Tax Invoices: What the VAT Law Says?

Article 1 of the VAT Decree-Law No. (8) of 2017 defines the Tax Invoice a written or electronic document in which the occurrence of a Taxable Supply is recorded with details pertaining to it.  The Tax Invoice could be either a written or electronic document as per the UAE VAT Law.  As per Article 65 of the VAT Law, the registrants who make the taxable supply should issue the original Tax Invoice and deliver the same to the recipients of goods and services.

Also, the registrant who makes a deemed supply is required to issue an original Tax Invoice and deliver it to a Recipient of Goods or Recipient of Services if available or keep it in his records in case there is no Recipient of Goods or Recipient of Services. The businesses can obtain more clarification regarding the conditions and requirements about the tax invoices from registered tax agents in Dubai.

Also read: An Essential Guide for Reverse Charge Mechanism Under VAT in the UAE

Conditions & Requirements for Tax Invoice

The VAT Law mandates the taxable businesses need to have the following particulars on the invoice to comply with the requirements of VAT in the UAE as per Article 59 (1) of the Executive Regulations of the VAT Law:

1. The words ‘Tax Invoice’ visibly displayed on the invoice
2. Name, address, and Tax Registration Number of the Registrant making the supply
3. Name, address, and Tax Registration Number of the Recipient where he is a Registrant
4. Sequential Tax Invoice number to facilitate the identification of the Tax Invoice
5. The date of issuance of the Tax Invoice
6. Date of Supply if it is not the same as the date of issuance of  the invoice
7. Description of Goods or Services supplied
8. The unit price, the quantity or volume supplied, the rate of tax, and the amount payable for each good or services articulated in AED
9. The amount of any discount if applicable
10. Gross amount payable in AED
11. Tax amount payable in AED along with the rate of exchange applied where the currency is converted from a currency different from the UAE dirham
12. Where the invoice relates to a supply under which the Recipient of Goods or Recipient of Services is required to account for Tax, a statement that the Recipient is required to account for Tax, and a reference to the relevant provision of the Decree-Law

Requirements for Simplified Tax Invoices

A simplified tax invoice is issued when the supply is less than the specified amount and the Recipient of Goods or Recipient of Services is not a Registrant as per Article 59 (5) of Executive Regulation Number 46 of 2020 and 52 of 2017. Such invoices are generally issued when the clients are retail purchasers who are not needed to provide a VAT number. Supermarkets and the businesses in the retail industry generally issue the simplified tax invoices in the UAE.

As per Article 59 (2) of the Executive Regulations of the VAT Law, a simplified Tax Invoice shall contain all of the following particulars:

1. The words ‘Tax Invoice’ should be clearly displayed
2. Particulars of the Registrant such as name, address, and Tax Registration Number
3. Date of issuance of the Tax Invoice
4. Description of the goods and services
5. Total consideration and the tax amount charged

Administrative Penalties for Violating Tax Invoice Requirements

The VAT registrants are required to comply with the requirements of Tax invoice as per the VAT Law. Failing to comply with the invoices would lead the taxable persons to incur hefty penalties from the Federal Tax Authority (FTA). The taxable businesses can avoid the penalties by associating with the best tax agents in Dubai from the start. The following are the major consequences that the taxable business have to face if they fail to comply with the laws of VAT in the UAE as per article 25 (o) of Federal Law No. (7) of 2017 on Tax Procedures

1. AED 5,000 if the taxable person fails to issue the Tax invoice or an alternative document while making any supply
2. AED 5,000 if the taxable person fails to comply with conditions and procedures regarding the issuance of electronic Tax Invoices

Hire the Best Tax Agents in Dubai, UAE

Failing to comply with the requirements of tax invoice under VAT in the UAE will lead to hefty penalties which call for the need to hire the best VAT consultants in Dubai such as Jitendra Chartered Accountants (JCA).

JCA is renowned among the business circles for providing specialized tax services such as UAE VAT registration, VAT deregistration, VAT compliance / VAT Return, excise tax services, and services related to VAT reconsideration etc. JCA ensures the businesses get efficient services through a dedicated team of VAT specialists and approved tax agents in Dubai, UAE. With JCA’s efficient VAT services in Dubai, UAE and a registered Tax Agent in Dubai, UAE the businesses ensure compliance with all the existing laws.