This briefing summarises the key themes, ideas, and facts regarding the upcoming e-invoicing mandate in the United Arab Emirates (UAE), drawing from “E-Invoicing in UAE.
1. Mandatory Implementation and Timeline
The UAE is in the process of modernising its tax system by introducing a mandatory e-invoicing system, referred to as the “E-billing system”. This transition signifies a shift away from traditional paper or PDF invoices.
- Mandatory Date: “By July 2026, e-invoicing will be made mandatory for all B2B and B2G (Business to Government) transactions.” This date was updated from an original plan for July 2025 due to “technical and system integration challenges”.
- Scope: The mandate will eventually apply to “all domestic taxpayers in B2B and B2G transactions.”
- Phased Rollout: Similar to implementations in Saudi Arabia and Malaysia, the UAE’s e-invoicing will be rolled out in phases. While “definite dates haven’t been announced for all entities,” Phase 1 go-live is expected in July 2026.
- Early Stages of Implementation: Key milestones have been:
- 25th October 2024: Dedicated Landing Page Published by FTA For eInvoicing Regulations.
- 6th February 2025: Data Dictionary released for Public Consultation.
- 27th February 2025: Federal Tax Authority (FTA) invited Public Consultation from Peppol Service Providers and industry leaders.
- 14th March 2025: UAE released the requirements for service provider accreditation.
- 28th April 2025: Accreditation application process for e-invoicing solution providers commenced.
2. The Peppol 5-Corner Model and DCTCE Framework
The UAE’s e-invoicing framework is built on the “Peppol 5-corner model,” also known as the “DCTCE” model. This model aims to ensure secure, standardised, and efficient exchange of invoices.
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- Key Components (5 Corners):Issuer: The seller generating the invoice.
- Receiver: The buyer receiving the invoice.
- E-Billing System by FTA: Integrates with Peppol PINT (Peppol Invoice Standard) for data sharing and acts as an invoice repository, receiving “only tax related information from both Sender ASP and Receiver ASP.”
- Sender Accredited Service Provider (ASP): “Verifies the data and sends the invoice to both the tax authority and the receiver ASP.”
- Receiver Accredited Service Provider (ASP): “Verify the received data, send an acknowledgement of receipt with tax data of invoice to FTA and send the e-invoice to the purchaser (the receiver).”
- Process Flow: The process involves the supplier sending an e-invoice to their ASP, who validates and converts it to the PINT AE format, sending it to the buyer’s ASP and a Tax Data Document (TDD) to the FTA. The buyer’s ASP validates the invoice, delivers it to the buyer, and sends a TDD to the FTA. Status messages are exchanged throughout the process.
- Standardisation: The use of “PINT AE (Peppol International for UAE)” ensures a unified XML schema, making invoices readable for all systems.
3. E-Invoice Requirements and Format
E-invoices in the UAE must adhere to specific technical and content requirements to be considered valid.
- Digital Format: Invoices “must be created as structured data files in XML formats, and not as PDF or any image format.” “Manual or unstructured invoices is not valid.”
- Structured Data: Must follow “PINT AE (Peppol International for UAE)” standards.
- Accredited Service Provider: Businesses “must use an official FTA-approved service provider connected to Peppol Network to send and receive invoices.”
- Real-time Submission: Invoices “should be sent immediately to the FTA when they’re issued and not later.”
- Mandatory Fields:Invoice Number (Unique identifier)
- Date of Issue
- Supplier Details (Name, address, TRN)
- Customer Details (Name, address, TRN – if applicable)
- Description of Goods/Services (Clear itemisation with quantities and unit prices)
- VAT Amount (Calculated at the applicable rate, e.g., 5%)
- Total Amount Payable (Sum of goods/services cost plus VAT)
- Currency used
- Language: “Arabic is not mandatory; e-Invoicing should be in English.”
- No QR Codes Required: “There is no requirement for QR codes to be printed on the eInvoices.”
- Error Correction: “In case of any errors in tax invoices, a credit note is required to be issued for its rectification.”
4. Accreditation of Service Providers
The FTA is actively accrediting e-invoicing solution providers to ensure the reliability and security of the system. Businesses must choose providers that meet strict criteria.
- Key Accreditation Requirements:Peppol Certification: Active Peppol Membership and successful completion of Open Peppol Conformance tests.
- Experience: Minimum “2 Years of experience” in the industry.
- Legal Incorporation: Legally incorporated in UAE, with foreign companies needing a subsidiary.
- Capital: Minimum 50,000 AED Paid-up Capital.
- Certifications: ISO 22301 (Business Continuity) and ISO 270001 (Data Protection) certifications.
- Compliance: Compliance with PINT AE and Data Dictionary requirements.
- Security: Multi-factor Authentication and Encryption for data exchange.
- Insurance: Professional Indemnity Insurance (AED 2,500,000), Crime Insurance (AED 5,000,000), and Cyber Fraud Insurance (AED 5,000,000).
- Self-Certification: Regarding liquidity, litigations, legal disputes, blacklisting, bankruptcy, criminal proceedings, and offering free exchange of 100 documents.
5. Benefits and Implications
The shift to e-invoicing is part of the UAE’s broader goal to modernise its tax reporting and enhance financial operations.
- Objectives and Benefits: The UAE Government aims to make invoicing “faster, more efficient, cut down the paper usage, improve transparency & compliance, prevent tax evasion, and align with the standards that are used in many countries.”
- “Reduces human errors”
- “Improves compliance with taxes”
- “Accelerates the process and pay cycles”
- “Increases transparency”
- “Reduced use of paper and storage requirements”
- Consequences of Non-Compliance: Failure to issue e-invoices when required “may result in fines or penalties from FTA and might also experience audit or tax filing problems.”
- Archiving: E-invoices must be archived for “5 years, can be extended with another 4 years in certain cases,” and “15 years for real estate.” Archiving abroad is “Allowed.”
- B2C Transactions: “B2C transactions are not currently within the scope of UAE eInvoicing.”
- Freelancers/Individuals: “As a VAT-registered individual, even if you are a freelancer or consultant, you will probably be required to issue e-invoices when the law is completely enforced.”
6. Preparation for Businesses
VAT-registered businesses are strongly advised to begin preparing for the mandate.
- System Modification: “Businesses who are registered for VAT should begin preparing in the meanwhile by changing their systems to meet expected compliance requirements. This requires modifying ERP or business systems to support real-time data transfer and e-invoicing formats.”
- Software Requirements: Businesses will need software that is “UAE VAT rules compliant,” “able to create invoices in structured formats,” and “capable of integrating with government portals when necessary.”
- Choosing a Provider: Businesses should select an FTA-approved e-invoicing platform or provider.
In conclusion, the UAE’s move to mandatory e-invoicing by July 2026 signifies a significant step towards a more digital, transparent, and efficient tax system, aligning with international standards. Businesses must proactively adapt their financial management systems and engage with accredited service providers to ensure compliance and avoid penalties.
See also E-Invoicing in UAE: A Complete Guide for Your Business – VATupdate
- See also
- Join the Linkedin Group on Global E-Invoicing/E-Reporting/SAF-T Developments, click HERE
