E invoicing UAE A time-stamped commercial document that itemizes and records a transaction between a buyer and a seller is known as an invoice. A paper receipt, a bill of sale, a debit note, credit note, a sales invoice, or an online electronic record are all examples of invoices. Value-added tax (VAT) – or goods and services tax (GST) in some countries – is computed for businesses based on these invoices.
An electronic invoice (e-invoice) is a document format that is used to issue, send, receive, process, and store invoices.
In the Gulf countries, the adoption of the e-invoicing system is picking up speed. UAE has signaled its intention to mandate an e-invoicing system after the Kingdom of Saudi Arabia (KSA) issued the legislation and announced the implementation deadlines.
Under the current UAE VAT law, e-invoicing is required:
The UAE implemented VAT on January 1, 2018. The UAE’s Federal Tax Authority recognises digital or electronic invoicing as an acceptable means of generating and using invoices, according to VAT law.
The law establishes universal rules, regulations, and standards for authenticating all electronic communications and electronic invoicing, as well as their legitimacy, using electronic signatures.
The UAE’s Ministry of Finance (MoF) has implemented an e-Procurement system to automate the full purchase cycle till all fees are paid. It allows vendors to participate in tenders and auctions held by UAE ministries and federal organizations over the internet. It also enables vendors to track purchase orders and generate digital invoices.
Since 2021, all internal and customer-facing transactions will be digitized, making the government completely paperless. For all of its functions, the government will no longer accept or issue paper documents. The goal of a paperless government is to save time, resources, and the environment.
Mandatory e-invoicing in the United Arab Emirates:
The UAE government has recently granted e-invoices legal status. However, it will, sooner or later, make e-invoicing mandatory in accordance with the KSA. Experts in this region who are regularly monitoring compliance predict the government mandate to be completed by March 2022.
What are the prerequisites for e-invoicing?
The UAE has established and published a value-added tax regulation that allows but does not require electronic invoicing and acknowledges the usage of electronic invoices. The consent of the buyer is not required in this case. For the authenticity and legitimacy of electronic communications, the Federal Law No. 1 of 2006 on Electronic Commerce and Transactions specifies equivalent norms, regulations, and standards. A digital signature is required in order to ensure the validity and integrity of electronic documents.
UAE government entities are allowed to take the following actions under federal law:
- Electronic filing, creation, and preservation of documents may be accepted.
- Electronic records may be used to provide licenses and permits.
- Electronic fees and payments may be accepted.
- Tenders and bids are accepted electronically in the public sector.
- Tax invoices in both printed and electronic form are recognised by Federal Legislative Decree No. 8 of 2017 on VAT.
The followings are some of the e-invoicing rules that have been outlined:
- In the UAE, taxpayers must keep their electronic documents in the same format they used to make, distribute, or receive them. They must guarantee that the invoice content is not altered and that the relevant controls are in place. Each e-timestamp invoice assures that the document has remained unchanged since it was created and is available for online viewing and printing.
- Electronic invoices must be in a format that is easily readable. Secure online access to e-invoices for PDF download should also be available.
- The origin’s legitimacy must be proved. Every electronic invoice has an original file that can be downloaded at any time.
Need More Discussion on E invoicing in the UAE?
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It’s time to plan and establish an e-invoicing strategy in the UAE that considers the influence of new protocols on financial management procedures and software systems. First and foremost, cloud-based e-invoicing is far easier to handle than in-house software. It’s because cloud accounting services are better able to handle e-invoicing.
For more discussion, call +971 50 172 1071 today.