The Federal Tax Authority (FTA) has established certain rules regarding the tax invoice format UAE issued for goods and services. All businesses operating in the UAE are required to meet all guidelines for issuing tax invoices to avoid any legal inconveniences. This blog will explain what a tax invoice is, what its significance is, how is it prepared, what are the key requirements, and most importantly, what are the details to keep in mind in order to comply with the UAE’s tax requirements.
What is a Tax Invoice in the UAE?
A tax invoice is a document typically issued by VAT-registered entities to the customers purchasing taxable goods. It serves as a record of the sale made by the seller. The executive regulations according to Article 59 explain the the requirements for a tax invoice and when it must be issued.
Similarly, when a tax invoice is issued, it must include necessary details like the name of the supplier, tax registration number, and total amount. Further information that needs to be included in a tax invoice format UAE is discussed further in the article.
When is a Tax invoice issued?
According to the law, a tax invoice can be issued after 14 days from the date of sale of taxable supplies. In addition, the taxable entities are required to comply with the conditions specified in Article 59 of the Executive Regulation. Additionally, there are several regulations related to tax invoice issuance and VAT invoice format UAE that businesses must comply with.
- While making a supply, the company must issue a tax invoice and deliver it to the customer.
- While issuing simplified tax invoices, the company does not need to show the net value of the items, i.e., the amount without taxes.
- On the other hand, while issuing detailed invoices, companies must show both the tax value and the net value. However, they can avoid showing the gross value of the transaction.
- The tax samples in the tax invoice format UAE must be in dirhams (AED). The issuing company must also mention the exchange rate used for the conversion in the transaction.
Things to consider for tax invoice format UAE
There is a special provision for periodic payments or consecutive invoices for goods and services in the UAE. In addition, the VAT invoice format UAE issued in foreign currency must have the following content:
- Tax payable (in AED)
- The exchange rate applied
What are the essential requirements in a Tax Invoice Format UAE?
The taxable entity issuing the tax invoice needs to comply with a series of requirements established by the law. These are:-
- Tax bill
- The sequential number
- Issuing date of the invoice
- Delivery time
- Supplier’s name, address, and TRN (Tax Registration Number)
- Buyer’s name, address, and TRN
- Details of the goods or services supplied
- The cost per unit, the quantity supplied, the tax rates, and the amount to be paid (in AED)
- Any discount allowed
- The gross price payable (in AED)
- Tax payable (in AED)
- The exchange rate applied (If applicable)
- A declaration regarding the reverse charge (If applicable)
According to the new amendment on the date of issuance of the UAE tax invoice format enforced on January 1, 2023, the seller must issue the invoice 14 days after the delivery of services or goods. Previously, there were no time limits for issuing the tax invoice.
What is the importance of tax invoice format in UAE?
All the VAT-registered businesses in the UAE need to ensure that they have the correct tax invoice format. The invoice allows the registrant to deliver goods or services that are subject to taxes. Hence, to avoid fines and penalties, the companies must get the right VAT invoice format UAE from the FTA. In addition, they must be well aware of the types of tax invoice formats that need to be presented to the authorities.
- Simplified tax invoice – These invoices are issued for supplies valued at less than AED 10,000. They are typically prepared by retail companies and do not need a VAT number either.
- Detailed tax invoice – On the other hand, these invoices are issued by companies that sell goods and services for an amount greater than AED 10,000. Therefore, the details included in this invoice are more than the simplified bill.
Details included in a simplified tax invoice
If the buyer of the goods is not registered under VAT, then the seller company can issue a simplified tax invoice, with the following data:-
- The term “TAX INVOICE” must be clearly visible
- The details of the registrant who supplied the goods: name, address, and tax registration number
- The date the invoice was issued
- Services or goods supplied
- The total amount and the tax collected
Details included in a detailed tax invoice
A detailed bill must strictly encompass the following details:
- The term “TAX INVOICE” must be clearly visible
- The details of the supplier of the goods or services: name, address, and tax registration number
- The details of the recipient: name, address, and tax registration number (if they are a registrant)
- Tax Invoice number
- Date of issue of the invoice
- The date of supply (if it is different from the date of issue of the tax invoice)
- Goods or services supplied
- The quantity or volume supplied for each good or service: the cost per unit, the tax rate applied, and the cost payable (in AED)
- Any discounts offered
- The gross amount payable (in AED)
Why do businesses need to prepare a Tax invoice?
There are several reasons why a business must consider preparing a tax invoice in the UAE:-
- Tax Compliance: To comply with the tax rules and regulations established by the government as a bill or invoice ensures that they are paying the right amount of tax.
- Expense Tracking: To track business expenses accurately and see where the money is going, so that business owners can plan accordingly.
- Reimbursement: For reimbursement and record-keeping, in case employees make business-related purchases.
- Legal Proof: To use as proof in case of disputes or audits.
- Input Tax Credit: To claim a credit for the tax business owners have paid on their purchases and reduce overall tax liability.
- Financial Records: To maintain organized financial records and manage the business efficiently.
- Professionalism: To showcase professionalism and transparency to customers in order to build trust and credibility.
To sum up, a tax invoice acts as a channel between your shopping cart and the tax collector. It is a key tool that helps businesses keep their finances in order, thereby staying on the right side of the law.
What are the exemptions for issuing a Tax invoice in the UAE?
Basically, a tax invoice must be issued in all situations, under the law by decree. However, there are certain exceptions. For instance, when the delivery qualifies for 0% tax, the issuer making the delivery doesn’t need to prepare an invoice.
Conclusion
In conclusion, the tax invoice format UAE is significant for businesses operating in any of the jurisdictions in the country. It not only helps market goods and services but also encourages the business to follow the rules and regulations imposed by law to avoid fines.
If you need more help regarding VAT or the overall tax system in the UAE, do not hesitate to contact Shuraa Tax. Their team of certified professionals will always be at your disposal.
