Tax Invoices in the UAE – What information must be included in your tax invoice?

A Taxable Person is required by law in the UAE to issue a tax invoice and deliver it to the recipient of the taxable goods and services.

Article 59 of the Executive Regulations on VAT governs the requirement for Tax invoices and when they must be issued.

To comply with Article 59 (1) of the Regulations, 

A valid Tax invoice must contain at least the following information:

• The invoice must visibly contain the words ‘tax invoice’ in a prominent place;
• The name, address and Tax Registration Number (the “TRN”) of the supplier of the taxable supplies;
• Where the recipient is VAT registered, it must show the recipient’s name, address and TRN;
• A chronological number based on a series which will serve as an exclusive identifier for the invoice;
• The date of issuance;
• The date on which the taxable supply took place;
• Adequate and concise description which is appropriate to identify the taxable supplies which are the subject of the invoice;
• The invoice must also reflect the unit price, the quantity, tax rate and the AED amount payable in respect of each separate supply description.
• The amount of discount applied, if any;
• The gross amount in AED;
• The tax amount in AED, including the rate of any exchange and the source thereof, in instances where there is a conversion from any other foreign currency;
• Where the customer is required to account for VAT, e.g., reverse charge, then a statement to that effect must be included in the invoice as well as the reference to the relevant legislation.

You should read: VAT Registration in UAE for Tax Invoicing

However, in response to numerous requests for clarity in this regard, the Federal Tax Authority (FTA) published VAT Public Clarification VATP006 which provides specific clarity in respect of the following aspects:

• A tax invoice must be issued and delivered in all circumstances where a taxable supply is made, even in transactions where a simplified tax invoice may be issued.
• There is no requirement to show the net value for line items when issuing a simplified tax invoice.
• In respect of full tax invoices, the tax value as well as the net value must be reflected, however it is not necessary to reflect the gross value of the item.
• Tax invoices provided in a foreign currency must also reflect the tax amount payable in AED as well as the exchange rate used.
• Rounding off should be used per line item and to the nearest fills.

Each of the aforementioned aspects will be dealt with in detail below.

Requirement to issue a tax invoice

As prescribed by Article 65 of the VAT Law, a VAT registered business is obliged to issue and deliver a tax invoice to the recipient of any taxable supply offered by such business.

However, in certain scenarios it is permissible for a supplier to issue a simplified tax invoice, i.e., an invoice which contains less information than that which is typically required.

Article 59(5) of the Executive Regulations on VAT prescribes the exceptional instances where it is permissible to issue a simplified tax invoice, i.e., this is where the recipient of the taxable supplies is not registered or where the recipient is registered however the amount payable is not more than AED 10,000.

It is important to bear in mind that the mere fact that a simplified tax invoice instead of a full tax invoice may be issued does not detract from the requirement that a tax invoice must still be issued and delivered to the recipient. Therefore, a tax invoice must be issued and delivered in all instances where a taxable supply is made, irrespective of whether such invoice will be a full or simplified invoice.

It is also noteworthy to mention that the FTA is of the view that merely offering to print out the tax invoice when a customer asks for it and otherwise not providing an invoice does not comply with the provisions of Article 65.

You should know: VAT Returns Fines and VAT Penalties in the UAE For Noncompliance

Simplified Tax Invoice – Line items shown at gross value

Article 59(2) of Executive Regulations on VAT provide that a simplified tax invoice must have at least the following information:

• The words ‘tax invoice’ must be clearly displayed in a prominent place;
• The name, address and TRN of the supplier of the taxable supplies;
• The date of issuance;
• Adequate and concise description which is appropriate to identify the taxable supplies which are the subject of the invoice;
• The total amount payable, together with the applicable tax payable.

Bearing the aforesaid in mind, the requirement is simply that the invoice must reflect the total amount, i.e., the gross value of the supply and the taxable amount payable. Therefore, it is not necessary for each item to be shown at a net value and it is sufficient to simply reflect the gross value of the supply with a separate line showing the amount of tax which was included in the gross value.

Full Tax Invoices – Line items shown at net value

As stated above, a full tax invoice must reflect the unit price, the quantity, tax rate, the AED amount payable in respect of each separate supply description as well as the total gross amount payable in AED.

Therefore, a full tax invoice has several line items which shall each reflect the net amount payable and the tax due separately. However, the gross amounts do not have to be reflected for each line item as the gross amount payable shall be stated at the end of the invoice.

Read more: Request for Voluntary Disclosure Under the UAE Tax Procedures Law

Tax Invoices in a Foreign Currency

If a tax invoice is issued in a currency other than AED, Article 59 of the Executive Regulations on VAT requires that the tax amount payable must be expressed in AED and the exchange rate applied to the conversion on the date of supply must be reflected.

Rounding off on Tax Invoices

Where tax on a supply is calculated as a fraction of a Fills, Article 61 of the Executive Regulations on VAT provides that the value may be rounded off to the nearest Fills on a mathematical basis, i.e., to the nearest whole Fills.

Therefore, in respect of a full tax invoice, this would mean that the rounding off must also be performed on a line-item basis

To know more and to discuss your concerns with our tax professionals, call us today!