How to Create Simplified VAT Invoices in the UAE?

In the UAE, VAT registered businesses must issue VAT-compliant invoices for every taxable supply they make. However, the type of invoice they issue depends on the customer and transaction amount. 

There are two main types of invoices that you can create in the UAE to account for VAT. They are:

• Simplified Tax Invoice
• Full Details Tax Invoice

In this article, we will learn everything about simplified tax invoices in UAE, how they differ from full details tax invoices, when to use them, and how to create a simplified VAT invoice.. 

What are Simplified Tax Invoices Under VAT in UAE?

A Simplified Tax Invoice under VAT in UAE is a shorter and easier invoice that businesses in the UAE can use for:

• Smaller transactions (less than AED 10,000)
• When selling to regular customers (not other businesses)

It doesn't require as much detailed information as a full invoice, but it still includes key details like the seller's name, VAT number, description of the items or services sold, the total amount (including VAT), and the VAT rate.

The Federal Tax Authority (FTA) allows simplified VAT invoices for smaller businesses with more frequent, small sales. This allows them to comply with VAT regulations without the administrative burden of issuing full invoices for every low-value transaction. Simplified invoices are used for everyday purchases at places like supermarkets, cafes, or small service providers.

Step-by-Step Guide to Create Simplified VAT Invoices

There are a few steps and pointers to keep in mind when preparing a simplified tax invoice in UAE under VAT law. They are:

1. Choose your invoicing system: Select a POS system, accounting software, or billing app capable of generating simplified VAT invoices. The invoices can be paper-based, computer-generated, or digital (such as SMS or PDF).
2. Configure the Invoicing software: During the first-time setup, enter your business details, including your registered name, address, VAT registration number (VATIN), and other relevant information.
3. Configure tax codes and rates: Set up the codes and rates for taxable items/services, zero-rated items, and exempt items according to your business offerings.
4. Generate the invoice : 

• For over-the-counter billing, input product or service details using a product identifier code, barcode reader, or other methods. 
• Provide customer details such as name and phone number for reference, however its not mandatory.
• Set up your system to provide a unique invoice number for record-keeping and tracking.
• Add a description of the goods/services supplied.

5. Store all the invoices: It is imperative to keep a record of all VAT invoices issued and received by you. They are generally needed for:

• Accounting and Auditing
• VAT return filing
• VAT payment Calculations
• Addressing Discrepencies

Details To Be Mentioned in Simplified VAT Invoice in UAE

To prepare a Simplified VAT Invoice, you need to mention the following details:

1. Supplier’s name, address, phone number, and other basic information about the supplier.
2. Tax Registration Number (TRN) of the Supplier.
3. Brief description of what goods/services are being sold
4. Date of supply, especially when it differs from when the invoice is issued.
5. Price per unit of product, the supplied quantity, and the payable amount in AED, including applicable VAT rate.
6. Gross payable value in AED.

Simplified VAT invoice in UAE:  Format and Example

Here is a government-prescribed format of a simplified VAT invoice in UAE:

Source: tax.gov.ae

Difference Between Full VAT Invoice and Simplified VAT Invoice

Conclusion

VAT compliance is crucial for staying within the law and ensuring smooth business operations. By following these detailed guidelines for creating VAT invoices, you can avoid penalties and maintain transparency.

VAT invoicing in the UAE is set to undergo changes, as the government is expected to implement an e-invoicing system by July 2026. If e-invoicing becomes mandatory for B2C transactions, the process for generating simplified VAT invoices will be updated, requiring simplified e-invoices instead.

For hassle-free invoicing and seamless e-invoicing compliance, connect with ClearTax today.