Discover key insights into the UAE’s upcoming e-invoicing framework, including its legal foundation, implementation phases and practical steps to prepare your business for this transition.
Introduction
The UAE Ministry of Finance (MoF) announced in July 2023 five strategic transformational projects, one of which was establishing an advanced billing framework at the federal level through an -billing system, generally known as e-invoicing1. The MoF has now released a dedicated webpage on e-invoicing providing further insights regarding e-invoicing implementation across the UAE and the scheduled dates for its roll out starting Q2 2026 (in phases)2.
The MoF has also published FAQs, clarifying certain aspects of the proposed e-invoicing model in the UAE3.
To set the legal groundwork, Federal Decree-Law No. 16 of 2024 published on 30 September 2024, amends the UAE VAT Law primarily to establish the legal framework for an e-invoicing system, making e-invoices valid for issuance and input tax recovery, effective from 1 November 2024. In addition, the MoF has issued Federal Decree-Law No. 17 of 2024, amending key provisions of Federal Decree-Law No. 28 of 2022 on tax procedures.
With the e-invoicing framework on the horizon, businesses need to start preparing to adapt to these changes. In this thought leadership document, we provide a brief overview of the e-invoicing requirements, key milestones and practical steps to help your organisation stay ahead of the transition.
What is e-invoicing?
e-invoicing refers to the electronic exchange of invoices between suppliers and buyers in a structured format that allows for automatic processing by a company’s IT systems. Unlike traditional invoices – PDFs, Microsoft Word documents or scanned images – e-invoices are issued, transmitted and received in a machine-readable format (encrypted XML file, as per the MoF announcement), ensuring accuracy, compliance and efficiency in reporting VAT transactions.
How e-invoicing works
The e-invoicing framework in UAE will operate based on the PEPPOL4, five-corner decentralised model5, with the MoF and Federal Tax Authority (FTA) in the fifth corner to collect and store details of issued e-invoices.
Under the e-invoicing framework, it will be mandatory for taxpayers to engage commercially with an Accredited Service Provider (ASP) – a MoF-certified technology vendor. The direct connections to the UAE e-invoicing technology infrastructure will be provided to ASPs and not to taxpayers (unless they opt to become an ASP themselves, which may prove to be costly and impractical for general businesses).
Which taxpayers and transactions fall within the scope of e-invoicing in the UAE??
Initially, the UAE’s e-invoicing system will focus on business-to-business (B2B) and business-to-government (B2G) transactions, regardless of the VAT registration status of the entities involved. We expect the MoF may expand this to include business-to-consumer (B2C) transactions at a later stage.
Who is in scope?
The e-invoicing system will apply to all taxpayers required to issue invoices under the UAE law. This includes businesses of various sizes, with large taxpayers expected to be the first to adopt e-invoicing during the initial phases. It is expected that smaller businesses will follow in subsequent phases, likely based on specific thresholds, such as annual turnover over the past couple of years.
VAT groups will also be required to comply, with each member of the group individually connecting to an Accredited Service Provider (ASP), while using the group’s Tax Registration Number (TRN) to ensure all transactions are captured within the e-invoicing framework.
a) Domestic transactions
As part of the initial mandate, B2B and B2G transactions will be covered under the e-invoicing scope. For this purpose, a Tax Identification Number (TIN) comprising the first 10 digits of the Tax Registration Number (TRN) will be used as a business identifier. Hence, B2B transactions will be part of scope regardless of VAT and corporate tax registration status, as long as you are dealing with business customers having a TIN.
b) Export transactions
Transactions with overseas customers will also be covered under the e-invoicing framework. Overseas customers are not required to register with a UAE ASP unless they have an obligation to apply for VAT or corporate tax registration in the UAE. For overseas customers who are already part of the PEPPOL network in their home country, their overseas PEPPOL address can be utilised for UAE e-invoicing purposes. For those not connected to the PEPPOL network, the UAE business will need to continue sharing invoices via email using a dummy end point (which will be shared by the MoF), typically in PDF format, as is being done currently.
Hence, international groups with entities across multiple jurisdictions (including the UAE) will need to assess which country’s e-invoicing requirements will be triggered and ensure systems are updated with relevant tax information for compliance with local regulations.
As we await further guidance, the MoF will continue to release updates regarding the types of transactions and businesses included in future phases of e-invoicing implementation.
Timelines
While specific details regarding the implementation phases are yet to be disclosed, based on our experience in other jurisdictions, it is anticipated that large taxpayers in the UAE will be required to adopt e-invoicing systems under the pilot programme. This is likely to commence once the ASPs are in place (yet to be announced by the MoF). Subsequently, other taxpayers will be integrated into the e-invoicing system in a phased manner to ensure a smooth transition and adequate support for all businesses involved.
What should be your next steps?
e-invoicing isn’t just a tax or a regulatory change. Organisations should start early to ensure there is no disruption to business operations. To ensure your business is ready for the UAE’s e-invoicing system, we recommend the following steps:
- Undertake tax and IT systems health checks: Conduct VAT and system gap analysis to evaluate existing systems and processes to identify areas that need improvement. This includes updating vendor and customer master data, ensuring compliance with e-invoicing standards.
- Form cross-functional groups to drive e-invoicing project: e-invoicing is not only a tax project and requires the participation of cross-functional teams, involving finance (including accounts receivable and procurements/payables), tax, IT, operations and legal to drive the initiative. e-invoicing implementation project teams should be established to ensure smooth implementation within timelines provided.
- Train your teams: Ensure that all your staff – especially in IT, finance, legal, procurement, accounts receivable and tax – are well-versed in the new requirements and ready for the transition.
- Engage with ASPs: Once the list is published by the MoF, identify and engage with potential service providers who can validate and transmit invoices to the FTA.
e-invoicing is a transformative organisational shift that requires proactive planning and cross-functional collaboration; starting early is essential to ensure seamless compliance and uninterrupted business operations.
1) https://mof.gov.ae/the-ministry-of-finance-announces-its-transformational-projects/
2) https://mof.gov.ae/einvoicing/
3) https://mof.gov.ae/einvoicing/faqs/
4) Pan-European Public Procurement OnLine
5) https://peppol.com/blog/what-is-peppol/
Contact us
Contact our PwC UAE VAT/Tax Technology team below to discuss how e-invoicing will impact your business and how to get operationally ready for it.
