Updated on: May 18th, 2023
4 min read
The adoption of the e-invoicing system is picking up pace in the Gulf countries. With the Kingdom of Saudi Arabia (KSA) issuing the regulations and announcing the timelines for implementation, the United Arab Emirates (UAE) has also indicated its plans to mandate the system.
VAT was introduced in the UAE on 1st January 2018. As per the VAT law, the UAE’s Federal Tax Authority (FTA) recognises digital or electronic invoicing as a valid mode to generate and use invoices or Fatoorah.
“Federal Law No. 1 of 2006 on Electronic Commerce and Transactions” applies to electronic records, documents, and signatures. It relates to electronic commerce and transactions, giving legal recognition for their use.
The law lays down uniform rules, regulations, and standards for authenticating all electronic communications and electronic invoicing through electronic signatures, including their validity.
As per Federal Law, government departments can:
The Ministry of Finance (MoF) of the UAE adopts the e-Procurement system to automate the entire purchase cycle until fee payment is complete. It enables vendors to participate online in tenders and auctions called by the UAE’s ministries or federal entities. It also allows vendors to follow up on any purchase orders and issue digital invoices.
Likewise, the Telecommunications Regulatory Authority’s electronic invoicing system allows all contract suppliers to issue invoices electronically and follow up for contracts, purchase orders, invoice dues, and email notifications through electronic alerts.
The Dubai Smart government is going completely paper-free in 2021. Therefore, the initiative eliminates over 1 billion paper pieces every year, used for government transactions. The aim is to save time, resources, and the environment through the paperless government.
All the internal and customer-facing transactions will be digitised from 2021 to become an entirely paperless government. The government will no longer accept or issue paper documents for all its operations.
Smart Dubai targets adopting and implementing all the essential technology for paper-free transactions. In turn, it aims to set up a legal structure to address digital procedures.
Currently, the UAE government has given legal recognition to e-invoices. However, sooner or later, it shall also make e-invoicing mandatory following the lines of the KSA. Experts closely tracking compliance in this region expect the government mandate to be out soon.
The following are some of the rules outlined related to e-invoicing-
The UAE government has given legal recognition to e-invoices. However, it plans to make e-invoicing mandatory soon.
No, the VAT-registered businesses must raise invoices quoting VAT number in UAE.
Federal Tax Authority (FTA) has yet to release rules and regulations to implement e-invoicing in UAE.
VAT-registered sellers must issue a tax invoice to VAT-registered buyers when the value of taxable supplies exceeds AED 10,000.