What is an eInvoice?

It is a structured form of an invoice data that is issued and exchanged electronically between a supplier and a buyer and reported electronically to the UAE Federal Tax Authority. 

It is important to note that unstructured invoice formats such as pdf, word document, images, scanned copies and emails are not eInvoices.

Objectives and Benefits:

Real-Time Invoice Validation: The UAE's new e-invoicing framework includes real-time invoice validation. This means that all invoices will be automatically validated by the FTA’s system, ensuring that VAT is calculated accurately and promptly reported. The system will help businesses avoid common errors that could lead to penalties.

Standardization: E-invoicing systems often follow global standards, simplifying communication between businesses and tax authorities across different regions.

Tax Compliance: E-invoicing ensures all necessary VAT or tax details are included correctly, helping businesses stay compliant with tax laws.

Reduction in Human Errors: Automated e-invoicing systems reduce the risk of errors that can occur during manual data entry, such as miscalculations or missing details.

Minimized Risk of Invoice Fraud: Digital invoices are harder to manipulate than paper ones, reducing the chances of fraudulent activities like duplicate billing or fake invoices.

Global Reach: e-invoicing enhances global reach and facilitates cross-border transactions in several impactful ways:

Timeline:

Q4 2024 - UAE service provider accreditation
 procedures, accreditation of service providers.

Q2 2025 - e-invoicing related
 legislation updates.

Q2 2026 - phase 1 go-live
 of e-invoicing reporting.

Source - United Arab Emirates Ministry Of Finance - https://mof.gov.ae/einvoicing/