- May 16, 2022
- Posted by: Shuraa Tax Consultant
- Categories: Tax Invoice, UAE Taxation
A tax invoice is a written or electronic document that documents the occurrence and specifics of a taxable supply and is defined as such by the UAE VAT Law. The tax registrants who are making taxable supply are required by Article 65 of the VAT Law to issue an original Tax Invoice Format and send it to the recipients of the goods and services. In cases where the provisions exceed AED 10,000, all tax registrants are required to produce tax invoices on taxable deliveries to other registrants with all mandatory details.
Businesses who don’t send out tax invoices are subject to administrative fines. The UAE VAT Law has established several requirements for the issuance of tax invoices. These requirements must be strictly adhered to by businesses in the UAE to avoid administrative penalties for VAT.
UAE Requirements for Issuing Tax Invoices
To issue a tax invoice, the taxable people must satisfy certain requirements as per Article 59 of the Executive Regulations. Businesses can get assistance from VAT advisors in Dubai with tax invoice issuance. In the UAE, companies must abide by the following tax invoice requirements:
- In the UAE, businesses are required to provide a tax invoice whenever a supply is made. The recipient must receive the tax invoice. It consists of the suppliers that are eligible to issue a simplified tax invoice.
- Businesses are not required to include the net value (amount excluding tax) if they submit a simplified tax invoice.
- If a company sends a full tax invoice, each line item’s tax value and net value must be displayed. However, showing the gross value is not required.
UAE’s issuance of a Simplified Tax Invoice for VAT
The Federal Tax Authority permits the contents of the tax invoice to contain less information than is customary in certain circumstances. In the United Arab Emirates, these invoices are known as simplified tax invoices, and they are permitted by Article 59(5) of the Executive Regulations. It is possible to issue a simplified tax invoice in the following situations:
- If the recipient of the goods does not have a UAE VAT registration.
- If the recipient is a VAT-registered party and the supply’s consideration is AED 10,000 or less.
VAT Invoice Format UAE
Tax invoice design UAE is a crucial activity for all organisations who are registered for VAT. When a taxable supply of goods or services is made, a registrant must issue a tax invoice, which is a crucial document.
To avoid VAT fines and penalties in the UAE, all firms must adhere to the VAT invoice format established by the FTA. For all organisations, knowing how to create a tax invoice in the UAE is a crucial duty and question.
UAE FTA Tax Invoice Format
Businesses are required to use the UAE FTA Tax Invoice Format. There must be a Tax Registration Number (TRN) on a VAT invoice. Two categories of tax invoices exist:
- Simplified tax invoice.
- Full tax invoice.
Simplified Tax Invoice Content
Line items will be displayed at the gross value in a streamlined tax invoice.
The following information must be included in a simplified tax invoice format UAE:
- The invoice plainly states that it is a “Tax Invoice”.
- The supplier’s name, address, and Tax Registration Number (TRN).
- The day the tax invoice was sent out.
- A summary of the products or services offered.
- The full consideration received, and the taxes paid.
The whole consideration (or total gross value) is displayed at the bottom of the simplified tax invoice, and the tax included in that value is shown on a separate line.
Contents of a UAE full tax invoice
Businesses are typically required to provide a complete tax invoice. The following information should be included in a comprehensive tax invoice format UAE:
- A clear depiction of the text Tax Invoice.
- The supplier’s name, address, and tax identification number.
- The recipient’s name, address, and tax identification number.
- Tax invoice number in order.
- When the invoice was first issued.
- Supply date.
- A summary of the products or services.
- Total amount due in AED.
- Each line must contain net value and tax amount
Foreign Currency Issued Tax Invoices
A tax invoice issued in a foreign currency must contain the following information:
The exchange rate used (according to the exchange rates issued by the UAE Central Bank on the date of supply) and the tax amount due, expressed in AED.
Tax invoice rounding
When a tax invoice must be made and the tax owed on the supply is expressed as a fraction of a Fils, the amount may be rounded mathematically to the closest Fils.
As previously stated, the tax amount should be calculated line by line. In practise, this means that any rounding that is done should also be done line by line.
Mathematical logic should be used to round the tax value on the tax invoice to the closest whole Fils, or to two decimal places. This is what is meant by “rounding the value on a mathematical basis.”
For instance: 9.862 AED would change to 9.86, while 2.357 AED would become 2.36.
VAT for Discounted Bills
VAT will be applied on the value that is calculated after taking the discount into account. After the discount, VAT will be added to the pricing.
Only if the following requirements, which are outlined in UAE VAT Executive regulations, are satisfied will the discount be permitted to be deducted from the value of supply:
- The price drop has been advantageous to the buyer.
- The discount was funded by the supplier.
For instance, if the value of the supply is 10,000 AED and the discount is 500 AED. In this instance, after considering the discount value, the value of the supply is determined to be AED 9,500. VAT will be applied to AED 9,500.
Tax invoice-related administrative penalties
The UAE Tax Procedures Law makes it illegal to disregard tax invoice standards. According to amended vat penalties regime, failure by firms to produce a tax invoice when making any supply will result in an AED 2,500 fine for each case. Businesses who issue tax invoice electronically, if they do not follow the rules and regulations for the UAE’s issue of electronic tax invoices, will be subject to a fine of AED 2,500. Dubai’s VAT advisors can aid companies in avoiding fines.
Businesses who fail to send tax invoices will be subject to severe fines, but VAT consultants in Dubai like Shuraa tax Consultants can help you avoid the penalty. One of the top FTA-approved tax agents in the UAE, our knowledgeable staff can assist you with requirements such UAE VAT registration, VAT deregistration, VAT compliance / VAT Return, excise tax services, and services linked to VAT reconsideration, Corporate Tax filing etc.