Simplified Tax Invoice under VAT in UAE

The government of UAE introduced Value Added Tax (VAT) to benefit both the corporates as well as the people of the country. However, being a novel initiative, it is evident that people are less aware of its significance and thus are prone to cheating and other fraudulent activities. Hence, to remedy this situation, the Federal Tax Authorities mandated the issuance of UAE tax invoice while making a sale or purchase of taxable goods and services.

In this article, we will explore some basic details about Tax invoices in UAE, their types, their individual formats, and other relevant aspects.

Tax Invoice in UAE

According to UAE VAT Law, a tax invoice is a written or electronic document that records the occurrence of a taxable supply and its details. A VAT-registered business issues a tax invoice while making a taxable supply and delivers it to the recipient of the product. Moreover, the issued UAE tax invoice must contain accurate and complete information regarding the revenue and tax collected.

The VAT Law of the UAE Article 67 also states that a VAT-registered entity has to issue tax invoices within fourteen days from the date of supply.

Conditions to issue a tax invoice in UAE

According to Article 59 of the Executive Regulations, a taxable entity has to meet certain conditions to issue a tax invoice in UAE. Shuraa tax consultants in Dubai can help you understand these conditions and ensure that you adhere to the UAE tax invoice obligations set by the Federal Tax Authority.

The conditions to issue a tax invoice in UAE are as follows –

• When a taxable supply is made, the seller will issue a UAE tax invoice for the same and deliver it to the customer.
• While issuing a simplified invoice, the seller must not show the net value (the amount excluding the tax) for line items.
• While issuing a full tax invoice, the businesses have to show the tax value and net value for line items. Although they can skip displaying the gross value.
• If the tax invoice is issued in a foreign currency, then the seller must specify the tax amount converted to UAE dirhams, including the exchange rate of conversion.
• Line items must be rounded to the nearest Fils in a UAE tax invoice.

Important tips to prepare UAE Tax invoices in the specified format

Here are some key tips to work on a VAT invoice using the VAT invoice format established by the FTA –

• Include all the mandatory details such as the name, address, Tax Registration Number of both the supplier and the recipient, the date of issuance, a unique invoice number, and a full description of the goods or services being sold.
• Clearly indicate the amount of VAT being charged by breaking it down separately from the total amount.
• When issuing a VAT invoice for zero-rated or exempt supplies, clearly specify that no VAT is being charged.
• Make sure to keep a record of all the issued as well as received VAT invoices. This practice would further help businesses stay ahead in VAT reporting requirements and ensure that proper accounting is being maintained for all VAT transactions.
• Ensure that the UAE Tax invoice format complies with the UAE VAT regulations and is presented in a clear and easily understandable manner.
• While sending or receiving VAT invoices, check if they are properly signed and dated in order to avoid any disputes or issues down the line.

Types of UAE Tax Invoice

So, basically, two types of tax invoices are approved by the FTA in UAE -

1. Simplified Tax Invoice
2. Detailed Tax Invoice

Let’s have a detailed look at both of these invoices.

Simplified Tax Invoice in UAE

Under Article 59(5) of the Executive Regulations, a simplified tax invoice can be issued in the given circumstances –

• If the buyer of the goods is not VAT-registered in the UAE
• If the buyer is VAT-registered and the value of the supply made is AED 10,000 or less

Additionally, the contents of a simplified tax invoice include less information than a regular invoice.

Format of a Simplified Tax Invoice

• Words “Tax Invoice” clearly displayed
• Name, address, and Tax Registration Number (TRN) of the seller
• Issue date of tax invoice
• Description of supplied goods and services
• Charged tax amount

A simplified UAE Tax invoice format displays the gross value of each line item.

Detailed Tax Invoice in UAE

A detailed tax invoice is generally issued by VAT-registrants while making a sale to other VAT-registered entities such as merchants, wholesalers, etc. Additionally, if the provisions surpass AED 10,000, a detailed tax invoice shall be issued by the seller.

Format of a Detailed Tax Invoice

• Words “Tax Invoice” clearly displayed
• Name, address, and Tax Registration Number (TRN) of the seller
• Name, address, and Tax Registration Number (TRN) of the buyer
• A sequential Tax Invoice number
• Issue date of tax invoice

• The unit price, the quantity supplied, the rate of tax, the tax amount, and the net amount payable for each line item
• Any discounts offered
• The gross amount payable (in dirhams)
• The Tax amount payable, with the rate of exchange (for foreign currencies)

For discounted invoices, VAT will be charged on the value after giving the discount. The seller is allowed to reduce the discount from the value of the supply only if it fulfills the following conditions prescribed in UAE VAT Executive Regulations –

• The customer is benefitting from the reduction in price
• The supplier is funding the discount

Penalties concerning UAE tax invoice

Non-compliance with tax invoice requirements is punishable under the UAE Tax Law. According to article 25 (o) of Federal Law No. (7) of 2017 on Tax Procedures, any business that fails to issue a tax invoice while making any supply will be subject to a penalty of AED 5,000 by the UAE tax authorities. A similar penalty shall be imposed on businesses that fail to fulfill the conditions and procedures related to the issuance of Tax Invoices in the UAE.

Hence, to avoid such situations, it is advisable to seek expert assistance from Shuraa Tax to deal with tax-related matters in UAE.

Tips to avoid errors in a Tax Invoice

The UAE VAT Law mandates every registrant to provide adequate and accurate information in Tax invoices. For any incomplete or false information, the registrant will have to pay an administrative penalty to the authorities. Hence, the perfect way to ensure that the invoice incorporates all the required information in accordance with the law is to employ a tax specialist who would notify the business owner of any missing information and also help to make the necessary changes in the invoice following any new updates brought in the law.

Get the best tax services in Dubai

Businesses have to pay hefty penalties if they fail to comply with the tax requirements of FTA. Shuraa Tax can save you from such pitfalls and help you meet all the requirements associated with UAE VAT registration, VAT deregistration, VAT compliance, VAT Return, excise tax services, etc.

As one of the leading FTA-approved tax agents in the UAE, Shuraa Tax specialists are experts in all accounting domains and thus can handle your VAT procedures efficiently and complete them successfully. Contact Shuraa Tax (www.shuraatax.com) for a free consultation today!