Tax Invoice – UAE VAT requirements
It has been over a year of implementation of VAT in UAE and still, we find that businesses have to get their head around tax invoices. This is surprising as UAE VAT registered businesses are pretty comfortable with the Tax Invoices that they issue for their sales, having put in the effort to make it compliant with the requisite VAT laws, but are usually, not equally diligent when it comes to supplier Tax Invoices.
In some cases, they collect credit card payment slips assuming these to be tax invoices or at times do not bother to check the tax invoices for date and other required information. As accountants, it does require us to be diligent and get back to our customers to get the proper tax compliant records for their safekeeping as mandated by the Tax laws. Follow the link to check out UAE FTA guide on Tax invoices.
There are a few areas which have become standard areas for focus, petrol (usually it is the credit card slip and not the tax invoice), Payment of telephone bills (usually it is the payment receipt and not the Tax Invoice from the service provider), the same is the case with Utility Providers. It is also noted that the requisite attention is not usually given to critical elements of the Tax Invoice, like date and accuracy of UAE VAT calculation.
Far more concerning is the fact that most of the business to business invoices do not reflect the buyer and seller TRN numbers. This does expose businesses to non-compliance to requirements. In view, of our first-hand experience of shortfalls noted, we bring the focus on the minimum requirements of a Tax Invoice in this post. Read on.
- The document should clearly show “Tax Invoice” on the face of it.
- Name and address of the supplier with clarity on Emirate where the supplier is registered for VAT.
- Tax Registration Number (TRN) of supplier
- Date of invoice
- Sequential numbering of invoice
- Name and address of Buyer with clarity on Emirate where the buyer is registered for VAT (Specifically for B2B transactions)
- Tax Registration Number (TRN) of buyer
- Itemized bill for all Items/services being the subject matter of the transaction.
- Pricing of the items should be inclusive of tax
- Discounts if any can be given only at the item level and prior to application of VAT.
- The total VAT for the invoice should be clearly reflected.
While these requirements are very straight forward and simple, still the required focus on ensuring compliance is still not at an optimal level. It should also be noted that businesses do have practical concerns on aspects like when to date the invoice, how to adjust short payments or excess payments, scheduled payments, etc. The law does provide clarity on this to the extent that all these aspects can be addressed by way of Debit Notes and Credit Notes, which also have the same set of minimum criteria as an invoice.
Additional inputs, The UAE VAT guidelines allow for rounding of of extra decimal values on a line basis and not gross basis. The requirements are lesser for B2C invoices when compared to B2B invoices. It is also required to reflect the total VAT on the invoice clearly, specifically for foreign currency invoices, the UAE VAT should be reflected in AED with the applicable conversion rate. The UAE Central Bank rates are considered applicable conversion rates.
Hope you find the information useful, you can always write to us for any additional information or clarification you may require. You can check out our UAE VAT services here