The UAE is establishing a new e-invoicing standard in business-to-business (B2B) and business-to-government (B2G) transactions.
On 29 October, the Ministry of Finance and the Federal Tax Authority of the United Arab Emirates (UAE) announced an update to the VAT Law, which now encompasses provisions related to e-invoicing, including definitions, recovery processes, issuance procedures, and credit notes.
Additionally, on 24 October, the Federal Tax Authority revised its guidance concerning the B2B and B2G e-invoicing mandate set for July 2026. This update features a Frequently Asked Questions section, with plans to address B2C invoicing at a later date. The implementation will occur in phases, with businesses required to comply at designated stages based on specific criteria, and sufficient notice will be provided before the enforcement of these requirements.
The Authority is implementing a "Decentralised CTC and Exchange Model" (DCTCE), utilizing a 5-corner model and involving Accredited Service Providers operating within a Peppol framework.
It will implement a 5-corner model, allowing vendors and customers to exchange e-invoices directly without the necessity of obtaining pre-clearance from the Ministry. The initial version will be a 4-model. This approach is expected to be adopted on a Peppol PINT basis, which will involve the utilization of Accredited Service Providers (e-invoicing agents). These ASPs are tasked with validating essential information within the invoice and transmitting it to the customer through their agent. Additionally, the agent is responsible for sending the invoice to the Federal Tax Authority (the 5th corner), with no pre-clearance required from the Authority.
Phased launch plan for e-invoicing
The FTA has developed a comprehensive multiphase implementation strategy aimed at facilitating a seamless transition for businesses. Below is an outline of the timeline and key milestones:
- Q4 2024: issuance of draft technical requirements and ASP process; development of Data Directory;
- Q2 2025: draft legislation
- Dec 2025: rollout strategy
- July 2026: phase 1 launch
- Further phase waves to be confirmed
E-Billing System: Towards a Comprehensive Digital Tax Ecosystem
E-invoicing is an integral component of a broader initiative outlined by the Ministry of Finance, which refers to it as an "e-billing system" project aimed at establishing a sophisticated electronic billing framework and implementing it nationwide. This system is designed to automate the processes associated with tax return submissions, thereby streamlining the filing of tax returns, enhancing tax compliance, and minimizing instances of tax evasion.
At present, the government of the UAE has granted legal status to e-invoices, provided there is agreement between the parties involved in the transaction.
This initiative is in line with the implementation of e-invoicing in Saudi Arabia that took place in December 2021.
SAP add-on via clearance model
KGT SAP add-ons for SAF-T, e-invoicing and MTD UK for VAT work as a standalone application within the SAP system and do not change existing customer SAP functionality or processes. It is fully configurable with a custom namespace /KGT.
KGT partnered up with SAP regarding 'SAP Advanced Compliance Reporting for SAP HANA'. The 'Advanced Compliance Reporting' (ACR) service enables you to configure, generate, analyze, and electronically submit statutory reports that contain indirect taxes, such as value-added tax.
KGT also provides S/4 HANA transformation support.
