UAE's Newly Launched Mandatory E-Invoicing System & Key Compliance Requirements For Businesses And Practitioners

Introduction

The Ministry of Finance (MOF), United Arab Emirates (UAE) has officially unveiled its first-ever Electronic Invoicing System (e-invoicing system) to promote the country's unified digital invoicing framework through the Ministerial Decisions No. 243 & 244 of 2025on the Implementation of the Electronic Invoicing System. The initiative was rolled out by the UAE Ministry of Finance (MoF) in collaboration with the Federal Tax Authority (FTA) pursuant to Federal Decree-Law No. 8 of 2017 on Value Added Tax ("VAT Law").

The e-invoicing system initially applies to Business to Business (B2B) and Business to Government (B2G) transactions. In its first implementation phase, the E-invoicing system has excluded the Business to Consumer (B2C) transactions as the same will be addressed in a subsequent Ministerial Decision.

What is an Electronic or E-Invoicing System?

An Electronic or e-invoicing systemis a government-mandated digital system which requires businesses to electronically report invoices to a central portal for validation and authentication. The system's main purpose is to issue, transmit, exchange and share invoice and credit note data in a machine-readable format to eliminate human error.

Need for E-Invoicing System

E-Invoicing plays a pivotal role to replace the traditional paper and digital invoices like PDFs, which requires time-consuming manual data entry. An automated e-invoicing system streamlines this manual work. E-invoices contain the same data as traditional paper invoices but are issued, sent and received in an electronic format to reduce costs, improve efficiency and increase transparency.

Key Compliances for the Issuer of Electronic Invoices

• Appoint an Accredited Service Provider (ASP) upon the revenue being equal to or exceeding AED 50,000,000 by 31.07.2026 and implement the Electronic Invoicing System by 01.10.2027.
• Appoint an Accredited Service Provider (ASP) by 31.03.2027 and implement the Electronic Invoicing System by 01.07.2027 in case the revenue is less than AED 50,000,000.
• Notify the appointed Accredited Service Provider in writing of any change to the data registered with the Authority within five (5) Business Days from receiving confirmation of the amendment by the Authority.
• Issue and transmit an Electronic Invoice to the Recipient in respect of any Business Transaction.
• Issue and transmit an Electronic Credit Note to the Recipient in the following cases –
  • Where the Business Transaction is cancelled.
  • Where the agreed consideration for the Business Transaction is reduced for any reason.
  • Where the consideration for the Business Transaction is returned in full or in part.
  • Where an administrative or numerical error has occurred in relation to the Business Transaction.

• Issue and transmit the Electronic Invoice and the Electronic Credit Note to the Recipient within the prescribed timeline.
• Report Electronic Invoices and Electronic Credit Notes issued to the Authority within the prescribed timeline by the Minister.
• Make sure that the Electronic Invoice and Electronic Credit Note contain all the data fields and particulars, as prescribed by the Ministry.
• Store all Electronic Invoices, Electronic Credit Notes and any associated data within the State as per the prescribed timeline.
• Notify the Authority of a System Failure within 2 Business Days from the date of occurrence of the System Failure, in the mechanism and procedures determined by the Authority.

Key Compliances for the Recipient of Electronic Invoices

• Appoint an Accredited Service Provider (ASP) upon the revenue being equal to or exceeding AED 50,000,000 by 31.07.2026 and implement the Electronic Invoicing System by 01.10.2027.
• Appoint an Accredited Service Provider (ASP) by 31.03.2027 and implement the Electronic Invoicing System by 01.07.2027 in case the revenue is less than AED 50,000,000.
• Notify the appointed Accredited Service Provider in writing of any change to the data registered with the Authority within five (5) Business Days from receiving confirmation of the amendment by the Authority.
• Process Electronic Invoices and Electronic Credit Notes through the Electronic Invoicing System.
• Report Electronic Invoices and Electronic Credit Notes issued to the Authority within the prescribed timeline by the Minister.
• Make sure that the Electronic Invoice and Electronic Credit Note contain all the data fields and particulars, as prescribed by the Ministry.
• Store all Electronic Invoices, Electronic Credit Notes and any associated data within the State as per the prescribed timeline.
• Notify the Authority of a System Failure within 2 Business Days from the date of occurrence of the System Failure, in the mechanism and procedures determined by the Authority.

Penalty for Non-Compliance

Upon failing to comply obligations under the Electronic or E-invoicing system as an Issuer or Recipient, the Authority will issue an Administrative Fine Assessment and notify within 5 working days as per Article 76 Cluse 6 of the Federal Decree-Law No. (8) of 2017 on Value-Added Tax (VAT).

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.