Self-Billing Invoice UAE: Definition, Requirements & FTA Compliance Guide [With Template]

A self-billing invoice in the UAE is a tax invoice issued by the buyer on behalf of the supplier under a formal agreement. It is permitted under UAE VAT law when specific Federal Tax Authority conditions are met, including VAT registration of both parties and documented supplier acceptance.

Key Takeaways

• Self-billing shifts the responsibility for invoice issuance from the supplier to the buyer under a prior written agreement.
• Both parties must be VAT registered, and the supplier must agree not to issue separate invoices for covered transactions.
• Self-billing invoices must contain all mandatory tax invoice fields and a clear statement identifying the document as self-billed.
• The FTA requires periodic review of self-billing agreements, typically every 12 months, to confirm VAT status and accuracy.
• Records of all self-billing invoices and agreements must be retained for a minimum of five years.
• Self-billing arrangements remain valid under the UAE's upcoming e-invoicing framework when processed through accredited service providers.

What is Self-Billing Invoice in UAE?

A self-billing invoice is a tax invoice created and issued by the buyer rather than the supplier. The buyer prepares the invoice on behalf of the supplier for goods or services received, then sends the document to the supplier for acceptance. The supplier treats this as their official sales invoice for VAT purposes.

Under UAE VAT regulations, a valid tax invoice is normally required for all taxable supplies. The Federal Tax Authority permits the customer to issue this invoice provided both parties enter into a written agreement and comply with specific conditions.

How Self Billing Differs from Standard Invoicing

In standard invoicing, the supplier prepares and issues the invoice after delivering goods or completing services. The buyer receives and processes this invoice for payment and input VAT recovery. Self-billing reverses this flow entirely.

The buyer generates the invoice based on what was delivered or received, assigns an invoice number from their own sequence, and sends the document to the supplier. The supplier does not issue a separate invoice but instead accepts the buyer generated document as valid for VAT reporting.

The following table compares self-billing with conventional supplier invoicing across key compliance and operational dimensions.

When is Self-Billing required in UAE?

Self-billing is commonly adopted in scenarios where it offers operational advantages :

• High transaction volumes: Retailers or manufacturers dealing with numerous small suppliers (e.g., farmers, artisans) where managing incoming invoices is burdensome
• Stronger buyer systems: When the buyer has more advanced accounting capabilities than the supplier
• Construction industry: Main contractors working with multiple small subcontractors who lack invoicing infrastructure
• Consignment arrangements: Where goods are supplied on consignment and final quantities are confirmed by the buyer
• Self-Invoicing for Import of Services (Reverse Charge): For services received from overseas suppliers, UAE businesses must account for VAT under the Reverse Charge Mechanism. Previously, recipients were required to issue a self-invoice. However, FTA Public Clarification VATP044 (May 2025) confirms that UAE recipients are not required to self-issue tax invoices if they obtain and retain the original overseas supplier invoice, correctly account for VAT under reverse charge, and maintain sufficient documentation 

Note: If the overseas supplier does not issue an invoice, the UAE recipient must still issue a self-invoice to recover input VAT.

Conditions for Self Billing Under UAE VAT Law

The FTA allows self-billing only when specific conditions are met. Failure to comply can result in invalid invoices, denied input VAT recovery, or penalties.

• Prior Written Agreement: A signed written agreement must exist before self-billing begins. It must authorize the buyer to issue invoices on the supplier’s behalf and confirm that the supplier will not issue separate invoices for covered transactions.
• VAT Registration of Both Parties: Both the supplier and the customer must be VAT registered with valid TRNs. Self-billing is not permitted if either party is not registered.
• Supplier Acceptance: The supplier must accept the self-billing invoices, either explicitly or through a pre-agreed acceptance mechanism, such as no objection within a defined timeframe.
• Invoice Compliance: Self-billing invoices must include all mandatory UAE tax invoice details and clearly state that they are issued by the buyer under a self-billing arrangement.
• Periodic Review: Self-billing agreements must be reviewed regularly, typically every 12 months, to confirm VAT registration status and continued validity. Any change in TRN or deregistration requires updating or ending the agreement.
• Record Retention: Both parties must retain the self-billing agreement and invoices for at least five years and make them available to the FTA upon request.

Format of a Self Billing Invoice

A self-billing invoice must contain all mandatory fields required under UAE VAT law, plus a clear statement identifying the document as self billed. The format mirrors a standard tax invoice with the buyer acting as issuer.

Mandatory Fields

The following fields must appear on every self-billing tax invoice:

• Title: Clearly marked as "Tax Invoice" or "Self Billing Tax Invoice"
• Invoice Number: Unique sequential number generated by the buyer's system
• Date of Issue: The date the invoice is created, which determines VAT timing
• Supplier Details: Supplier's name, address, and Tax Registration Number
• Customer Details: Customer's name, address, and Tax Registration Number
• Line Items: Description of goods or services, quantity, unit price, and line amount
• VAT Details: VAT rate applied (5% or 0%) and VAT amount per line
• Totals: Total amount excluding VAT, total VAT amount, and total including VAT
• Currency: Must state the currency (typically AED)
• Self Billing Statement: A statement confirming the invoice is issued by the buyer on behalf of the supplier under a self-billing agreement

Process: How Self Billing Works in the UAE

Implementing self-invoicing requires structured coordination between the buyer and supplier. The following steps outline the typical workflow from agreement to VAT reporting.

Step 1: Agreement Setup

The buyer and supplier sign a self-billing agreement that defines:

• Scope of transactions covered (all supplies or specific categories)
• Duration (typically 12 months with renewal provisions)
• Responsibilities (buyer issues invoices, supplier does not issue separate invoices)
• Acceptance mechanism (how supplier confirms invoice validity)
• Credit note procedures (how adjustments are handled)

Step 2: Goods or Services Delivery

The supplier delivers goods or completes services as per normal business operations. Delivery notes, work completion reports, or service confirmation documents are exchanged as evidence of supply.

Step 3: Invoice Generation by Buyer

Based on goods received notes or service completion records, the buyer's accounting system generates an invoice on behalf of the supplier. The invoice includes all mandatory fields, calculates VAT at the applicable rate, and incorporates the self-billing statement.

Step 4: Supplier Approval

The buyer sends the self-billing invoice to the supplier for review. The supplier verifies quantities, prices, and calculations against their delivery records. If correct, the supplier confirms acceptance. If discrepancies exist, the parties resolve them before finalizing the invoice.

Step 5: Recording and VAT Accounting

Once accepted, both parties record the invoice:

• Buyer: Records the purchase and claims input VAT in their VAT return
• Supplier: Records the sale and declares output VAT in their VAT return

The same invoice serves as documentation for both parties, creating a single source of truth.

Step 6: Payment

The buyer pays the supplier according to agreed payment terms, referencing the self-billing invoice number. Since the buyer controls invoice timing, payments can be processed more efficiently without waiting for supplier invoices.

Step 7: Credit Notes (If Required)

If adjustments are needed due to returns, price corrections, or errors, the buyer issues a self billed credit note under the same arrangement. The credit note follows the same format requirements and requires supplier acknowledgment.

Step 8: Periodic Review and Renewal

Before the agreement expires, both parties review the arrangement and confirm continuation. This review ensures VAT registration details remain current and both parties are satisfied with the process.

Example Scenario of Self Billing

The following scenario illustrates how self-billing operates in practice within a construction industry context.

Scenario: Main Contractor and Subcontractor

MainBuild Construction Co. (buyer) engages multiple small subcontractors for specialized work. One subcontractor, ElectroFix LLC (supplier), provides electrical installation services. Rather than waiting for ElectroFix to issue invoices, MainBuild implements self-billing.

Agreement: MainBuild and ElectroFix sign a self-billing agreement specifying that MainBuild will issue monthly invoices based on approved work logs.

Work Performed: In January 2026, ElectroFix completes electrical work valued at AED 50,000. They submit work completion reports verified by site supervisors.

Invoice Generation: On 31 January, MainBuild generates invoice SB-ELEC-001 with the following details:

• Description: Electrical installation services per work report WR-2026-015
• Amount: AED 50,000
• VAT at 5%: AED 2,500
• Total: AED 52,500
• Self-billing statement included

Supplier Approval: MainBuild emails the invoice to ElectroFix. ElectroFix verifies the amounts against their work records and confirms acceptance via email.

VAT Recording: MainBuild records AED 2,500 as input VAT. ElectroFix records AED 2,500 as output VAT. Both use the same invoice as documentation.

Payment: MainBuild pays AED 52,500 to ElectroFix on 15 February, referencing invoice SB-ELEC-001.

Audit Trail: Both parties retain the self-billing agreement and all invoices. If the FTA audits either party, the documentation demonstrates proper VAT accounting.

Free UAE Self-Billing Invoice Template [Word]

Here is ready to use FTA-compliant self-billing invoice format to simplify your VAT documentation process.

Download Self Billing Template [Word File]

Benefits of Self Billing Invoicing

Self-billing provides operational and compliance advantages for both buyers and suppliers when implemented correctly.

Benefits for Buyers

• Greater Control: The buyer controls invoice timing, formatting, and accuracy, eliminating delays caused by late or incorrect supplier invoices.
• Timely Input VAT Recovery: Since invoices are generated internally, buyers can claim input VAT promptly without waiting for supplier documents.
• Reduced Reconciliation Effort: Invoices align precisely with purchase orders and goods received records, minimizing discrepancies.
• Administrative Efficiency: Processing uniform self generated invoices is faster than handling invoices from multiple suppliers with varying formats.

Benefits for Suppliers

• Reduced Administrative Burden: Suppliers do not need to prepare and issue invoices, saving time and accounting effort.
• Faster Payments: Buyers who control invoicing often process payments more quickly since no invoice receipt delays occur.
• Accurate Sales Records: Suppliers receive accurate documentation of all transactions without the risk of forgetting to invoice delivered goods or services.
• Focus on Core Operations: Smaller suppliers can concentrate on their primary business activities rather than invoicing administration.

Mutual Benefits

• Single Source of Truth: One set of invoices serves both parties, reducing disputes and simplifying audits.
• Stronger Compliance: Consistent, accurate invoicing supports proper VAT reporting by both parties.
• Reduced Disputes: Invoices based on confirmed deliveries minimize disagreements over quantities or amounts.

Self Billing Under UAE E-Invoicing

The UAE is implementing a mandatory e-invoicing framework with phased rollout beginning in 2026. Self-billing remains valid under this framework but must comply with additional technical requirements.

E-Invoicing Requirements for Self Billing

Under the e-invoicing mandate, self-billing invoices must be:

• Generated in the PINT AE structured format
• Transmitted through Accredited Service Providers (ASPs)
• Validated against FTA technical and VAT rules before acceptance

Ministerial Decision 243 of 2025

Ministerial Decision 243 of 2025 confirms that self-billing is permitted within the e-invoicing framework where both supplier and customer are VAT registered and the conditions in UAE VAT Executive Regulations are met. Businesses using self-billing must ensure their ASP supports self-billing document types and proper routing.

Practical Implications

Businesses currently using self-billing should:

• Confirm their ASP supports self-billing under the PINT AE format
• Update self-billing agreements to reference e-invoicing compliance
• Ensure ERP systems can generate self-billing invoices in the required XML structure
• Test transmission flows before mandatory deadlines

Conclusion

Self-billing offers a practical invoicing solution for businesses with high transaction volumes or relationships with smaller suppliers who lack sophisticated accounting capabilities. The arrangement shifts invoice responsibility to the party with stronger systems while maintaining VAT compliance for both parties.

Businesses considering self-billing must ensure formal agreements are in place, both parties maintain valid VAT registration, and all invoices meet FTA requirements. As the UAE transitions to mandatory e-invoicing, self-billing arrangements must adapt to structured formats and accredited transmission channels. Proper implementation reduces administrative burden, accelerates payment cycles, and creates a clear audit trail that satisfies FTA compliance standards.