Regulatory updates - United Arab Emirates

UAE has announced the issuance of Federal Decree-Law No. 17 of 2024, which amends key provisions of Federal Decree-Law No. 28 of 2022  of tax procedures. Additionally, Federal Decree-Law No. 16 of 2024 introduces amendments to some provisions of Federal Decree-Law No. 8 of 2017 related to Value Added Tax (VAT).

Below is the key summary of the changes.

Definitions

Several definitions have been added or revised to support the implementation of e-invoicing, now including specific terms relevant to the e-invoicing system.

Input VAT recovery

Article 55 has been amended to require taxable persons to retain tax invoices compliant with the Electronic Invoicing System as a condition for input VAT recovery. This requirement applies to all invoices issued or required to be issued as electronic invoices.

Tax invoices and credit notes

Articles 65 and 70 have been amended to specify that taxable persons subject to e-invoicing requirements must issue invoices, credit notes, and other related electronic documents in accordance with system standards.

Penalties for non-compliance

Article 76 has been amended to include penalties for failing to issue tax invoices and credit notes within the specified timelines.

This resource outlines the initiative's key objectives and will be the go-to source for stakeholders navigating this digital transition.

The UAE's new e-invoicing system will implement a decentralized 5-corner model, utilizing the Peppol network to enable seamless invoice exchange and ensure full platform interoperability. This approach allows for efficient, secure transmission of electronic invoices between service providers of trading parties, with only certified providers permitted to submit data to a centralized platform managed by the Tax Authority.

The timelines for the mandate roll-out have been further clarified as follows:

• Q4 2024: Service providers can begin the accreditation process, with further details expected to be released soon;
• Q2 2025: Legislation updates will be introduced;
• Q2 2026: Phase 1 go-live.
  
  

With e-invoicing and CTC rapidly gaining traction across the GCC — particularly in Saudi Arabia and now the UAE — it's crucial for businesses in the region to stay ahead of this digital transformation. Pagero is actively monitoring developments in the UAE to ensure you're fully informed and prepared. Stay tuned for more updates!

The Ministry of Finance of the United Arab Emirates (MoF) has revealed its countrywide CTC e-invoicing mandate to the broader public.

The UAE has decided to opt into the DCTCE or 5-corner model, leveraging Peppol specifications. By this move, UAE joins the growing group of countries deploying the most modern CTC model, including among others Singapore and Belgium. UAE intends to establish its own Peppol Authority and leverage Peppol PINT as format, in a similar fashion to other non-EU Peppol markets, such as Malaysia, Japan, Singapore, Australia and New Zealand.

The initial scope will include B2B and B2G transactions, while B2C transactions will be looked into in the future.

The MoF has indicated that they have no plans to develop any e-invoice portal for SMEs; this role must be fulfilled by Accredited Service Providers (SP). They are, however, considering making limited free-of-charge offerings as one of ASP accreditation criteria.

We expect further announcements and clarifications from UAE according to the following schedule:

• Q3 2024: Development of ASP certification requirements and procedures, as well as development of UAE data dictionary
• Q2 2025: Release of e-invoicing legislation
  • MoF envisages that businesses will be able to contract SP and start exchanging e-invoices under 4-corner model prior to entry into force of the reporting requirement.
• December 2025: Rollout strategy
  • Release of rollout schedule based on taxpayers' size
• July 2026: Phase 1 go live for reporting
  • MoF envisions a gradual introduction based on company size, but companies will be allowed to voluntarily opt-in for reporting earlier than envisaged timelines

If you want to learn more about the 5-corner model (which Pagero has co-developed with other stakeholders, incl. tax administrations), we encourage you to read Peppol CTC Reference Document, DCTCE model, or if you want to have an easily-digestible version, check out our Peppol blog on Peppol CTC, which as well covers basics of 4-corner model and Peppol.

Stay tuned with Pagero for updates in the UAE.

The Ministry of Finance of the United Arab Emirates (UAE MoF) introduced e-invoicing implementation to simplify business processes, help with tax reporting, offer real-time insights into economic performance, and reduce paper wastage.

MoF intends to introduce the “E-Billing System” project which considers implementing the advanced countrywide electronic billing system. This project will presumably introduce Peppol CTC mandate covering nationwide e-invoicing and e-reporting requirements.

Furthermore, the system will automate the procedures for filing tax returns with the tax system to facilitate filing tax returns, improve tax compliance, and reduce tax evasion cases. The implementation of this project is planned on a gradual basis and is intended to be completed by July 2025.

The transformational projects align with the new government work methodology and the general concept of transformational projects in the UAE. The five major strategic initiatives are as follows:

• Supply strategy for the federal government
• Transparency in climate spending data
• Public-private partnership
• Tax
• Electronic billing system

The Ministry of Finance, in partnership with the Federal Revenue Service, is the one developing the “electronic billing system” project to activate an advanced national system, automating the sending and delivery of tax returns. The project includes different stages and goals, aiming at reducing tax evasion.

More details are expected to be released soon by the UAE tax authority on the future e-invoicing system. Pagero is closely monitoring the developments in the country and will inform its stakeholders about the key changes in due time.

The UAE Cabinet of Ministers released Cabinet Decision No. (49) of 2021 to lower part of the penalties levied by Cabinet Decision No. (40) of 2017. The amendment will be taking place on 28 June 2021.

According to the amendment, the penalties imposed before the effective date and have not yet processed will be waived 70% of the total unpaid amount if it meets all the following conditions:

• The penalties imposed by violating Cabined Decision No. (40) before 28 June 2021 have not yet paid the total amount;
• The registrant has settled taxes in full amount by 31 December 2021;
• The 30% of the administrative penalties that haven’t paid up before 28 June 2021 need to be processed no later than 31 December 2021.