Understanding the Tax Invoice Format in UAE: A Step-by-Step Overview

Tax invoices are fundamental in a business. It is a written or electronic document that acts as proof of transaction and records the specifics of the supply made by the business. According to Article 65 of the UAE VAT Law, all VAT-registered businesses in the UAE, while making taxable supplies, are required to issue an invoice in accordance with the defined tax invoice format UAE including all mandatory details and send it to the recipients of the goods and services. Those failing to comply with this law would be subject to administrative fines.

Requirements for issuing tax invoices in the UAE

Article 59 of the Executive Regulations requires businesses to meet certain requirements while issuing a tax invoice in the UAE.

• Whenever a supply is made, the company must issue a tax invoice.
• The recipient of the product or services must ensure to receive the tax invoice.
• A simplified tax invoice can only be issued by authorized sellers.
• The net value (amount excluding tax) is not included in a simplified tax invoice.
• The tax value and net value of each line item must be displayed in the full tax invoice.
• The gross value is not needed in the full tax invoice.
• The mandatory details included in a tax invoice are the name, address, and tax identification number of the buyer and the seller, the date of issuance of the invoice, the unique invoice number, and description of supplies.
• The amount of VAT charged must be shown in the tax invoice. However, it should be separate from the total amount charged.
• If no VAT is charged for zero-rated or exempt supplies, it must be clearly specified.
• A record of all VAT invoices that are issued and received must be properly maintained. This would help in staying abreast of VAT reporting requirements.
• The tax invoice format UAE must comply with the VAT regulations of the UAE.
• The invoice should be easy to understand and include all mandatory information.
• All the invoices must be properly signed and dated to avoid disputes.

Following these guidelines will help businesses avoid potential issues and ensure that their tax invoices comply with UAE regulations.

Tax invoice format UAE

Tax registrants are required to maintain the correct UAE tax invoice format to ensure compliance with the VAT regulations. The Federal Tax Authority (FTA) has outlined specific requirements for tax invoices that every business is required to follow to ensure accurate reporting and payment of VAT.

A proper tax invoice format UAE helps businesses avoid penalties and fines from the FTA, track VAT transactions, and calculate VAT liabilities precisely.

Requirements for UAE tax invoice format

Understanding a tax invoice and its proper format is essential for businesses to comply with the VAT law. A tax invoice format UAE includes the following details:

• The title “Tax Invoice” clearly displayed
• The unique sequential number
• The date of issuance of the invoice
• Details of the seller – Name, address, and Tax Registration Number (TRN)
• Details of the buyer – Name, address, and Tax Registration Number (TRN)
• Detailed description of the supplied goods or services
• Quantity and unit price of the supplies
• Applicable Tax rate and the exact amount of Tax charged

If businesses meet these requirements, they can ensure that their tax invoices are all-inclusive and legally compliant. Most importantly, they facilitate accurate tax calculation and reporting, thereby safeguarding businesses from potential penalties and legal troubles.

Types of Tax Invoices in the UAE

There are primarily two types of tax invoices used by businesses, depending on the requirements of their tax jurisdiction.

Simplified Tax Invoice

A simplified tax invoice is a less detailed version that displays line items at the gross value. This format is often used for smaller transactions or for transactions where the requirements of a full tax invoice are not needed. It includes the following information:

• The title “Tax Invoice”
• The name, address, and TRN of the supplier
• The date on which the tax invoice was issued
• A summary of the supplies made
• The total amount received and the taxes paid

The total gross value is displayed at the bottom of the invoice, while the tax included is mentioned in a separate line.

Full Tax Invoice

This format is usually used for larger transactions or for transactions involving international trade. Businesses are usually required to issue a full tax invoice with the following information:

• A clear display of the text “Tax Invoice”
• The name, address, and TRN of the supplier
• The name, address, and TRN of the buyer
• Tax invoice number
• The original date of issuance of the invoice
• The date of supply
• A description of the products or services
• Total amount due (in AED)
• The net value and tax amount in each line

If the tax invoice is issued in foreign currency, the following details would be required:

• The payable tax amount must be stated in AED (United Arab Emirates Dirhams) to ensure uniformity and simplify the tax calculation process.
• The exchange rate must be applied in accordance with the rates published by the UAE Central Bank on the date of supply.

Rounding on Tax Invoices

The UAE has strict guidelines when it comes to calculating and presenting amounts on tax invoices. These guidelines are more critical when invoices are issued in foreign currencies. There are specific rounding rules established by the UAE in order to ensure accuracy when converting foreign currency amounts to UAE currency. They help in ensuring fair-mindedness in financial transactions and follow the regulatory framework.

Rounding on tax invoices also facilitates consistency in cross-border financial dealings, thereby helping businesses calculate and report their tax liabilities accurately.

Need for issuing Tax Invoices in the UAE

Businesses provide tax invoices for several reasons:-

• Tax compliance: Businesses must issue tax invoices to adhere to the tax rules and regulations set by the government. It also ensures that the right amount of tax is being paid.
• Tracking expense: Businesses can track their expenses accurately with tax invoices. They can assess where their money is going and accordingly manage their finances.
• Reimbursement: Tax invoices facilitate reimbursement and record-keeping while making business-related purchases.
• Legal evidence: It can be used as proof in case of disputes or audits.
• Input tax credit: Business owners can claim a credit for the input tax (tax paid on business purchases) while filing tax returns and reduce their overall tax liability.
• Financial records: Invoices help companies maintain organized financial records, thereby managing the business competently.
• Professionalism: Issuing invoices is a sign of professionalism and transparency, which eventually helps in building trust and credibility.

Thus, tax invoices serve as a key tool in keeping the business in order and on the right side of the tax authorities.

Administrative penalties for non-compliance

Disregarding tax invoice standards is illegal under the UAE Tax Procedures Law. The revised VAT penalties regime imposes a fine of AED 2,500 on firms that fail to produce a tax invoice when making a supply. Similarly, if a company does not follow the rules and regulations while issuing tax invoices electronically, it will be subject to a fine of AED 2,500.

Need solutions to avoid legal troubles? Seek help from the VAT advisors of Shuraa Tax.

Conclusion

Thus, businesses are strictly instructed to follow the tax invoice format UAE to ensure compliance with the regulations and avoid legal consequences. VAT consultants in Dubai, like Shuraa Tax Consultants, can be your guide in such situations. Shuraa Tax is equipped with the best FTA-approved tax agents who can assist you with VAT registration, VAT deregistration, VAT compliance, excise tax services, corporate tax filing, and more.

Get in touch with Shuraa Tax at [email protected]