e-Invoicing in the United Arab Emirates

Updated on :  

08 min read.

The adoption of the e-invoicing system is picking up pace in the Gulf countries. With the Kingdom of Saudi Arabia (KSA) issuing the regulations and announcing the timelines for implementation, the United Arab Emirates (UAE) has also indicated its plans to mandate the system.

e-Invoicing requirements under the current UAE VAT law

VAT was introduced in the UAE on 1st January 2018. As per the VAT law, the UAE’s Federal Tax Authority recognises digital or electronic invoicing as a valid mode to generate and use invoices or Fatoorah.

The “Federal Law No. 1 of 2006 on Electronic Commerce and Transactions” applies to electronic records, documents, and signatures. It relates to electronic commerce and transactions, giving legal recognition for their use. 

The law lays down uniform rules, regulations, and standards for authenticating all electronic communications and electronic invoicing through electronic signatures, including their validity.

As per the Federal Law, the government departments can:

  • Accept the creation, submission, filing and retention of documents in electronic mode.
  • Issue any decision, approval, licence, and permit electronically.
  • Accept fees or any other payments in an electronic form.
  • Call for tenders and receive bids pertaining to government procurement electronically.

The Ministry of Finance (MoF) of the UAE adopts the e-Procurement system to automate the entire purchase cycle until fees payment is complete. It enables vendors to participate online in tenders and auctions called by the UAE’s ministries or federal entities. It also allows vendors to follow up on any purchase orders and issue digital invoices.

Likewise, the Telecommunications Regulatory Authority’s electronic invoicing system allows all contract suppliers to issue invoices electronically and follow-up for contracts, purchase orders, invoice dues, and email notifications through electronic alerts.

UAE’s Paperless Strategy 2021

The Dubai Smart government is going completely paper-free in 2021. Therefore, the initiative eliminates over 1 billion paper pieces every year, used for government transactions. The aim is to save time, resources, and the environment through the paperless government. 

All the internal and customer-facing transactions will be digitised from 2021 to become an entirely paperless government. The government will no longer accept or issue paper documents for all its operations. 

Smart Dubai targets adopting and implementing all the essential technology for paper-free transactions. In turn, it aims to set up a legal structure to address digital procedures.

Mandatory e-invoicing implementation in the UAE 

Currently, the UAE government has given legal recognition to e-invoices. However, sooner or later, it shall also make e-invoicing mandatory following the lines of the KSA. Experts closely tracking compliance in this region expect the government mandate to be out by March 2022.

Essential tips for e-invoicing in the UAE

The following are some of the rules outlined related to e-invoicing-

  • The taxpayers in UAE must maintain the electronic document in the same format as the one used to create, send, or receive. They must ensure they do not alter the invoice content and have necessary controls. The timestamp applied on each e-invoice ensures that the document has stayed unaltered since its creation and is available for online display and print.
  • Electronic invoices are required to be in a format that allows readability. There should also be secured online access to e-invoices for downloading as PDF.
  • The authenticity of its origin must be guaranteed. For every electronic invoice, there is an original file ready for download anytime. Certified e-signature is used to check the issuer and authenticate or verify data electronically.
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