As per the new rules, businesses must understand the UAE e-invoicing requirements and adapt to new changes. The intentions behind the introduction of e-invoicing in 2026 are part of the UAE’s mission to digitalize the economy and drive innovation. Businesses and government entities will soon benefit from a new e-invoicing system that uses simple, automated, and standard processes to send invoices in near real-time and report taxes easily to the FTA.
In July 2023, the Ministry of Finance announced an e-invoicing system, which is an advanced billing system at the federal level. The MoF has released a dedicated page on e-invoicing, providing insights regarding e-invoicing. In this article, we will provide an overview of e-invoicing requirements and key steps to help your business stay ahead of the transition.
What is an E-Invoice? – UAE E-Invoicing Requirements
An e-Invoice or electronic invoice is a structured form of invoice exchanged between buyers and suppliers and reported to the FTA in the UAE. Unlike traditional invoices like PDFs, scanned images, scanned emails, or Word documents, e-Invoices are issued and transmitted in XML format as per the MoF requirements. The machine-readable format (XML) ensures accuracy, efficiency, and compliance in tax reporting.
What are the Objectives of E-invoicing? – UAE E-invoicing Requirements
The e-invoicing system has the following objectives,
Digitalization
E-invoicing will reduce the human involvement in certain businesses and tax reporting, making the UAE’s ecosystem more automated and digitally enabled.
Enhance Operational Efficiency
Optimize cost and business operations, minimizing processing time and reducing paper waste to meet the sustainability goals.
Reduce VAT Leakage
For the past few years, the VAT revenue has been making significant changes in the UAE’s revenue. Therefore, it is essential to create an ecosystem to identify and reduce intentional and unintentional VAT leakage in the country. The E-invoicing system is helping countries identify and minimize such leakages.
Development of the Digital Economy
The objective of e-invoicing is to encourage the development of a digital economy by creating an e-invoice network that brings together digital professionals.
Economic Growth
It helps with the growth of the economy and provides big data analytics.
Security Enhancement
It ensures security and minimizes the risk of fraud and unauthorized access through secure data exchange protocols and encrypted transactions.
Contribution Towards Policy Making
By adopting e-invoicing, the UAE government will have access to the relevant Information in near real-time. The data will help provide deep insights for policymakers for identifying sectors that need government support.
Benefits of E-invoicing for Businesses – UAE E-Invoicing Requirements
E-invoicing is beneficial due to the following reasons,
Accessible Latest Technology
82% of the UAE’s businesses are small businesses with an annual income of AED 3 million. With the help of the latest and affordable technology, which creates a simple and automated environment for them.
Reducing Invoice Processing Cost
We can see from other countries implementing e-invoicing that it helps reduce invoice processing costs for firms and governments by up to 66%.
Improves Cash flow
When invoices are created and sent through an automated and standard system, it helps reduce mistakes. Invoices reach buyers immediately, which allows firms to receive payments faster and manage their money with ease.
Financial Visibility
An invoice provides every aspect in a readable format, which helps with future analysis and decision making.
Invoice Exchange Internationally
By using the standard system such as OpenPeppol, the business sector can access a wider network where businesses can exchange e-Invoices effortlessly with companies beyond borders.
Facilities Compliance
It is mandatory that the reporting of invoice tax data to the FTA is done through the UAE’s recognized service providers. The reporting will make it easy to automate pre-population of specific fields in the expedited refunds process and VAT returns.
How the UAE E-invoicing System Works?
The UAE’s e-invoicing regime will operate based on the PEPPOL “5 corner” model, with the FTA and MoF to collect and store e-Invoices.
Under the UAE’s e-invoicing regime, taxpayers must engage commercially with an Accredited Service Provider (ASP), which is a registered technology provider authorized by the UAE Ministry of Finance. Only ASPs will have a direct connection to the UAE’s e-invoicing technology infrastructure, not the taxpayers.
Another critical point is that in the UAE, each company must have its own connection with the ASP while utilizing the Tax Registration Number (TRN) of the group.
Key Steps – UAE E-invoicing Requirements
Key steps involve the following,
- Supplier. The supplier generates the invoice by entering invoice data into the ERP system and sends it through an ASP.
- ASP. The ASP approves the invoice data and ensures it meets the e-invoicing standards of the UAE.
- Invoice Transmission. The approved invoice is then transmitted to the buyer’s ASP, making sure it meets the PEPPOL standards.
- Reporting to FTA. The ASP reports the approved invoice data to the FTA in real-time.
Buyer Receives Invoice. The buyer receives the invoice via their ASP, ensuring compliance and accuracy.
Timeline – UAE E-invoicing Requirements
| Quarter 4 | Quarter 2 | Quarter 2 |
| 2024 | 2025 | 2026 |
| UAE Services Providers accreditation process | E-invoicing related | Phase 1: go live of e-invoicing reporting |
| Accreditation of Services Providers | Legislation Updates |
The UAE E-invoicing Framework – UAE E-invoicing Requirements
The UAE’s e-invoicing framework is a systematic approach to digitalize and improve the accuracy and efficiency of VAT reporting. The e-invoicing framework follows PEPPOL standards, which require an electronic invoice process for compliance and accuracy.
The Federal Tax Authority is the regulatory authority for e-invoicing requirements in the UAE and partners with registered e-invoicing providers or ASPs for a seamless experience. The ASPs convert invoice data to Peppol format and make the process efficient.
The framework complies with the tax regulations of the UAE and requires all e-Invoices to have a certified electronic signature and to maintain it for 10 years.
What is the Impact of E-invoicing on Taxpayers? – UAE E-invoicing Requirements
Primarily, the UAE’s e-invoicing system will focus on business-to-government (B2G) and business-to-business (B2B) transactions. However, the MoF may expand it to business-to-customer (B2C) transactions later on.
Who is in Scope?
- The system applies to all taxpayers who are required to issue invoices under the VAT law of the UAE.
- Businesses of various sizes are included, although large taxpayers are expected to adapt the e-invoicing framework in the initial phase.
- Small businesses will likely follow with a specific threshold based on their annual income over the past few years.
- VAT groups must also follow these rules. Each member must have its own link to an ASP while using the group TRN to ensure all transactions are a part of the e-invoicing system.
What Transactions are in Scope?
Transactions given below are included in the scope.
Local Transactions
As a part of the initial decree, the e-invoicing system covers the B2B and B2G transactions. For this process, the Tax Identification Number (first 10 digits of the TRN) will be used as the business ID.
Export Transactions
International transactions with customers are also covered under the e-invoicing framework. Overseas clients do not need to register with an ASP in the UAE unless they are mandated to apply for VAT or corporate tax registration in the UAE. Also, overseas clients who are connected with their home country’s PEPPOL network can use their PEPPOL address for e-invoicing. If the clients are not associated with the PEPPOL network, the UAE business will continue sharing invoices in PDF format through email, as is currently being done.
Key VAT Law Amendment – UAE E-invoicing Requirements
With the launch of the e-invoicing system in the UAE, authorities revised the Federal Decree-Law No. 16 of 2024 to make e-invoicing mandatory starting from October 30, 2024.
These updates introduce new definitions such as “Electronic Invoices”, “Electronic Invoices System”, and “Electronic Credit Notes”, officially expanding “Tax Credit Note” and “Tax Invoice” to include digital formats. Moreover, it is a key step towards an automated and streamlined invoicing system which aligns with the FTA’s digital compliance goals.
Updates to Articles
Updates to articles 55, 65, 70, and 76 will strengthen the e-invoicing rules,
- Article 55 requires businesses to keep e-Invoices to claim input VAT, which ensures digital proof of eligible tax recovery.
- Articles 65 and 70 now require that taxable persons issue tax invoices and credit notes digitally through the official e-invoicing system, making sure they’re connected to the FTA system.
- Article 76 introduces penalties for not issuing e-Invoices and credit notes within the due dates.
- Additionally, Federal Decree-Law No. 17 of 2024 explains the e-invoicing framework and gives the MoF the power to set rules, timelines, and which entities must follow these rules.
- To prepare, businesses must start reviewing and updating their billing system and ERP to make sure they support the e-invoicing system.
How to Prepare for UAE Invoicing Requirements?
To ensure your business is ready for the UAE e-invoicing system, we suggest the following steps.
Prepare Early
Start early for an easy and seamless transition, especially when integrating your system with the service providers.
Review Your ERP
Assess your ERP and invoicing systems to find if they’re compatible with the e-invoicing framework.
Training Workers
Make sure your workers in finance, IT, legal, accounts receivable, and tax are well prepared for the new transition and requirements.
Partner with ASPs
After the publication of the list by the MoF, engage with approved service providers who can approve and transmit invoices to the Federal Tax Authority.
Final Words
All in all, all businesses must be aware of UAE e-invoicing requirements, which include training your staff, assessing your systems, and implementing solutions. It will help the UAE towards digital transformation, minimizing fraud, ensuring tax compliance, and improving tax efficiency.
Partner with Alriyady to stay updated with the FTA regulations and updates regarding e-invoicing to ensure business efficiency and tax compliance. You can count on our team of experts for the whole procedure. Our other services include UAE Golden Visa, Bookkeeping, Digital Marketing, and more.
