Intro
The Ministry of Finance (MOF) has officially announced a new update regarding E-invoicing in the United Arab Emirates. The new update posted is applicable to B2B invoices and B2G invoices with no further details posted yet regarding B2C invoices. Initial requirements shared by the Ministry of Finance indicate that transactions will happen through the Peppol network through what’s called Decentralized Continuous Transaction Control and Exchange (DCTCE) / 5 corner; the five corner model which the UAE E-invoicing is going to be built on.
Requirements of The E-invoice
E-invoices stand for any exchanged document between suppliers and buyers electronically but in a structured data format; eliminating manual processes and replacing them with automated ones.
Essential Requirements That Must Be Found Include:
- Have to be in a structured format, this does not include PDF, Word documents, images, HTML invoices in web pages, scanned invoices, paper invoices, or invoices sent via fax machines.
- E-invoices have to be sent from the seller’s system to the buyer’s system while adhering to the correct format requirements.
Supporting this decision, the UAE Ministry of Finance announced amendments to VAT laws regarding the E-invoicing systems, general requirements, storing invoices, and reporting among other details to be shared later on.
The electronic sharing and receiving of invoices has to be through Peppol accredited service providers. Reporting and validation of the issued invoices to The Ministry of Finance (MOF) and Federal Tax Authority (FTA) is going to be the responsibility of the authorized service provider (SP) of the invoice issuer.
The Stages of The Implementation
1. First Stage Q4 of 2024:
Development & Requirements including accrediting service providers.
2. Second Stage Q2 of 2025:
E-invoicing Legislation and detailed updates regarding E-invoicing mandates.
3. Third Stage July 2026:
Phase 1 live reporting, includes launch of the official E-invoicing system to mandate taxpayers to validate and issue invoices according to the requirements shared by MOF.
Important Notes To Consider
According to the information published up to this moment, the process of sending and receiving invoices has to be between Accredited Service Providers (ASP) who are authorized Peppol Access Point Providers only. The Ministry of Finance (MOF) is yet to publish the list of accredited ASPs.
The rollout phases will be done in a similar manner to KSA where businesses are going to be required to comply at designated stages defined by the MOF to ensure a smooth implementation for businesses.
Why is This Important?
The key objectives of UAE invoicing include:
1. Encouraging a paperless economy.
2. Increasing government revenue collection.
3. Combating tax evasion.
4. Pushing towards a digitized economy.
5. Accurate audits and transparency.
6. Economy growth by utilizing the data gathered.
7.Minimizing the processing time of invoices & increasing efficiency.
Preparation For E-invoicing in The UAE
To successfully implement the requirements of E-invoicing in the UAE, taxpayers must understand all published regulations and future requirements and adhere to them in the specified time period.
This includes proper understanding of invoice data formats and structures. Additionally, it’s crucial to find accredited service providers (ASP) within the Peppol network to ensure compliance with UAE legislation.
The data regarding this is still not fully published, however the UAE Ministry of Finance has announced more updates will be posted soon so it’s important to follow up on that.
Conclusion
The E-invoicing in UAE implementation is set to be effective in July 2026. While the detailed scope is still ongoing, the larger scope has been published with the key guidelines to be followed. Further technical specifications are still not fully available but the MOF is going to publish it soon. It’s advised that businesses stay up-to-date to ensure compliance in time and check the FAQs posted by MOF on the website.
