Electronic invoicing in United Arab Emirates

E-invoicing using PEPPOL is not yet a mandatory standard in the United Arab Emirates (UAE).
Tax Authority
The Tax Authority in the United Arab Emirates is the Federal Tax Authority (FTA), as stated in several of the search results. The FTA is responsible for implementing and managing the tax system in the UAE, including the Value Added Tax (VAT) and Excise Tax. The FTA has launched various initiatives, such as the Muwafaq Package to facilitate doing business among SMEs and the Tax 10 platform to encourage professional excellence and creativity. All taxable persons are required to electronically register for UAE CT with the FTA within a prescribed timeline and obtain a Tax Registration Number. The UAE does not levy income tax on individuals, but it does levy corporate tax on oil companies and foreign banks. Additionally, the UAE has secured approximately 243 Double Taxation Agreements (DTA) and Bilateral Investments Treaties (BIT) to exempt or reduce taxes on investments and profits from direct and indirect taxes.
Invoice Obligation
E-invoicing has been granted legal status in the United Arab Emirates (UAE) and may become mandatory in the future. The UAE recognizes the use of electronic and/or digital invoicing, and Federal Law No. 1 of 2006 on Electronic Commerce and Transactions applies to electronic records, documents, and signatures related to electronic transactions and commerce, giving them legal recognition. While e-invoicing is currently not mandatory in the UAE, experts predict that the government will mandate it in the near future, likely following the lead of neighboring Saudi Arabia, which implemented mandatory e-invoicing in December 2021. In fact, some experts monitoring compliance in the region predict that the UAE government may announce the mandate as early as March 2022, though this did not appear to have happened by the current date. When e-invoicing does become mandatory in the UAE, it is likely that invoices will need to be generated and sent only in electronic format, an electronic signature will be mandatory, and there will be a ten-year archiving obligation. Invoices must be securely stored to guarantee their integrity, authenticity, and availability during the required storage period, which is currently five years after the end of the tax period to which the invoice relates.
Operating Model
Electronic invoicing or e-invoicing is recognized as a valid mode to generate and use invoices or Fatoorah in the United Arab Emirates (UAE). The Federal Tax Authority of UAE recognizes and encourages the use of electronic invoicing to promote paperless transactions and document management. However, there is currently no mandatory requirement for businesses to implement e-invoicing in the UAE. To implement e-invoicing successfully in the UAE, taxpayers should consider following these steps: determine the requirements to implement e-invoicing, familiarize your organization with the e-invoice schema, find a suitable vendor to reorient your enterprise resource planning (ERP) systems, and ensure that your invoices comply with the purchase order of the company you are invoicing. The UAE is likely to follow the Saudi model for e-invoicing, which involves the ability to produce QR code e-invoices and the use of an approved E-Invoice Generation Solution for B2B and B2C transactions where there is no requirement for a VAT deduction. The E-Invoice Generation Solution must be verified and approved by the Federal Tax Authority. It is critical for businesses to comply with the invoicing requirements in the UAE to avoid delays in the invoice payment process. As per the VAT law, the UAE's Federal Tax Authority recognizes electronic records, documents, and signatures under "Federal Law No. 1 of 2006 on Electronic Commerce and Transactions." In summary, while e-invoicing is not mandatory in the UAE, it is recognized and encouraged by the government to promote paperless transactions and document management. To implement e-invoicing successfully, taxpayers should determine the requirements, familiarize themselves with the e-invoice schema, find a suitable vendor, and ensure compliance with invoicing requirements. The UAE is likely to follow the Saudi model for e-invoicing, involving the use of an approved E-Invoice Generation Solution for B2B and B2C transactions, and compliance with "Federal Law No. 1 of 2006 on Electronic Commerce and Transactions" is essential.
Required Taxpayers
The issuance of electronic invoices is not currently mandatory for all taxpayers in the United Arab Emirates (UAE). However, some sources suggest that the UAE government is considering introducing mandatory B2B e-invoicing in the future, similar to the recent implementation in Saudi Arabia. As of now, e-invoicing is recognized as a valid mode to generate and use invoices or "Fatoorah" by the UAE's Federal Tax Authority. The Federal Law No. 1 of 2006 on Electronic Commerce and Transactions applies to electronic records, documents, and signatures. While e-invoicing is not currently mandatory, VAT return filing is required for all VAT registered taxpayers in the UAE since 2018. Responsible businesses must submit their online VAT return periodically, with VAT returns generally submitted quarterly (some companies may have monthly filing requirements). In summary, while e-invoicing is not currently mandatory for all taxpayers in the UAE, it is recognized as a valid mode of generating and using invoices. VAT return filing, on the other hand, is mandatory for all VAT registered taxpayers in the UAE since 2018.
Normativity
Electronic invoicing (e-invoicing) is recognized and accepted as a valid mode for generating and using invoices in the UAE. The Federal Law No. 1 of 2006 on Electronic Commerce and Transactions applies to electronic records, documents, and signatures, and establishes uniform rules, regulations, and standards for the authentication and validity of electronic communications, including e-invoicing and the use of electronic signatures. While e-invoicing is not mandatory in the UAE, a law has been published that allows its use and does not require the buyer's consent. However, the UAE is reportedly planning to introduce mandatory B2B e-invoicing in 2022, following Saudi Arabia's e-invoicing implementation in December 2021. It's worth noting that larger taxpayers in Tunisia are required to use e-invoicing, and Egypt is moving towards a similar framework. For suppliers who wish to send invoices electronically, it's important to ensure that the relevant government departments accept the filing, submission, creation, or retention of documents in electronic format. Sending invoices more than once or to multiple email addresses can cause duplicate checks, delaying the processing and payment of the invoice. It's also important to comply with the relevant import requirements and documentation to avoid customs issues.
Type of documents
In the United Arab Emirates, electronic invoicing is recognized and allowed by law. According to Federal Law No. 1 of 2006 on Electronic Commerce and Transactions, electronic records, documents, and signatures related to electronic transactions and commerce are legally recognized. Invoices can be created and distributed electronically, and an electronic signature must be used. These documents must also be stored electronically for ten years. Regarding the format of electronic invoices in the UAE, they are required to be in a format that allows readability, and secured online access to e-invoices should be available for downloading as a PDF. The authenticity of its origin must be guaranteed, and for every electronic invoice, there is an original file ready for download anytime. PDF documents are treated as original electronic invoices for tax and legal purposes. Therefore, by agreeing to use PDF as an electronic invoice, no other document can be prepared or issued, such as paper invoices. As a supplier, you remain responsible for the invoices you issue. However, electronic invoicing is not mandatory in the UAE. The buyer's consent is not required, and it is up to the supplier to decide whether to use electronic invoicing or not.
Peppol Standard
e-invoicing using PEPPOL is not yet a mandatory standard in the United Arab Emirates (UAE), but the country has recognized the use of electronic invoices and transactions. The Federal Law No. 1 of 2006 on Electronic Commerce and Transactions provides a legal framework for electronic records, documents, and signatures related to e-transactions and commerce, which gives them legal recognition. This means that e-invoices can be used in the UAE, but there is no obligation for businesses to use PEPPOL. However, the adoption of e-invoicing is increasing in the Gulf countries, including the UAE. The UAE has indicated its plans to mandate e-invoicing, but there is no clear timeline for this yet. Furthermore, the UAE VAT law allows e-invoicing without requiring the buyer's consent. PEPPOL is primarily a way to send invoices to customers in the public sector, but it is also an international network that enables companies to exchange business-critical electronic documents with registered members of the network. PEPPOL is used to send e-invoices in accordance with European standards, and it is also being adopted in other parts of the world. However, it is not yet a mandatory standard in the UAE.
Standard Format
There does not seem to be a specific standard format for e-invoicing in the United Arab Emirates (UAE). However, the UAE recognizes the use of electronic and/or digital invoicing as a valid mode to generate and use invoices or Fatoorah, as per the VAT law and "Federal Law No. 1 of 2006 on Electronic Commerce and Transactions."
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