One of the strategic transformative projects announced by the Ministry of Finance (or “MoF”) of the United Arab Emirates in 2023 was the formation of a sophisticated federal billing system via the “E-Billing System,” also referred to as “e-invoicing.”
Groundwork is being set up to implement the E-invoicing system in 2026 with full effect. For instance, MoF has dedicated a whole website to E-invoicing that provides useful insights on the implementation and expected timelines of its rollout, along with some FAQs for further clarification. Furthermore, the VAT law has been amended by the Federal Decree Law No. 16 and 17 of 2024 mainly to legalise the new E-invoicing framework and validate the acceptance of e-invoices for input tax recovery purposes.
All of this makes it clear that the E-invoicing system is on the horizon, and companies must start preparing beforehand in order to adjust to the upcoming changes in the VAT framework. Businesses can take assistance from VAT consultants in the UAE, like Tax Gian, for the strategic implementation of the new regulations into their system.
Understand the Timelines
The MoF has not clearly stated the final date of launch of e-invoicing. However, experts predict that the Pilot Program will mandate large businesses in the UAE to integrate e-invoicing in their systems in 2026. Gradually, more businesses will be added into the framework in phases to ensure support for businesses and a smooth transition to the new system. The MoF has shared the following timeline for businesses on its website to help them prepare;
- 2024 (Q4): Procedures for service provider accreditation and legislative updates for e-invoicing were provided during this period.
- 2025 (Q5): More updates regarding e-invoicing and changes in the VAT law were made to support the upcoming system.
- 2026 (Q6): Phase 1 of e-invoicing reporting is expected to go live in this phase.
Key VAT Law Amendments
Effective since 2024, certain amendments have been made to the VAT law by Decree no. 16 to incorporate e-invoicing. It’s important for businesses to know these amendments in order to prepare for e-invoicing in the UAE.
- The updates include new definitions, including electronic credit notes, electronic invoices, and an electronic invoicing system formally digitalising simple tax credit notes and tax invoices.
- Certain articles of the Decree clearly demonstrate compliance with e-invoicing.
- Businesses are required to keep electronic invoices for the recovery of input tax to ensure electronic proof of VAT recovery for some qualifying transactions. (Article 55)
- Taxable businesses must issue electronic credit notes and electronic invoices wherever applicable and ensure they integrate with the FTA frameworks. (Article 65, 70)
- Businesses will face penalties for not issuing electronic credit notes and electronic invoices within legally established timelines. (Article 76)
- Another Federal Decree law no. 17 of 2024 defines the e-invoicing system and enables the MoF to publish e-invoicing-related decisions to integrate the system, set the timelines for effective implementation, and decide the requirements for subject businesses.
Seek assistance from VAT consultants in the UAE to better understand the legislative amendments.
Learning from Saudi Arabia’s E-Invoicing System
UAE businesses can navigate KSA’s e-invoicing system as it gives useful insights for businesses to prepare for a significant change.
- Businesses in KSA that started early preparations faced fewer challenges when the go-live phase started. UAE businesses must also begin now, engage with ASPs and assess their current systems.
- Businesses in KSA that conducted regular workshops and training sessions experienced fewer compliance risks and found it easier to commit to the new system. UAE businesses must also ensure that their tax, finance and IT teams are trained enough to manage the requirements of e-invoicing.
- Some KSA businesses found it difficult to integrate their ERP systems with providers. UAE businesses must make sure that their ERPs are compatible and have the ability to integrate with PEPPOL.
- KSA businesses that monitored their systems continuously and keenly after the go-live phase addressed issues readily and managed them effectively. UAE businesses must also do this for better efficiency and compliance.
More Steps to Prepare for E-Invoicing in UAE
Businesses are recommended to consider the following steps to ensure they are ready for e-invoicing to go live:
- Take an early start: The earlier you start preparing, the smoother your transition to the new system, especially when it comes to integrating with the ASPs.
- Assess your current system: Reviewing your invoicing system and ERPs and making them compatible with the upcoming system can help. Businesses should also consider IT health checks and VAT health checks.
- Training is Key: Your team should be ready for the big news. Train your tax, accounts, procurement, legal, finance and IT team beforehand.
- Engaging with Providers: The MoF is yet to publish the list of service providers. Keep an eye on that; once the list is out, businesses must start identifying and engaging with the potential ASPs who can transmit their invoices to the FTA.
- Seek Assistance from VAT consultants in Dubai: Businesses can also take experts’ help to adapt their systems to e-invoicing.
How can Tax Gian help you prepare?
At Tax Gian, we have a team of expert VAT agents in Dubai, UAE, who are already well-versed in the upcoming changes and new laws. We can help you assess your current systems to ensure a seamless transition to the new one and provide necessary training on new regulations. Talk to our experts regarding your e-invoicing needs, and they will find a solution for you.
