The UAE is gradually turning a fully digital tax system. One of the most important changes along this path is the switch to e-invoicing. Any business has to make important choices because of this change, which affects all businesses.
The Federal Tax Authority (FTA) has finally said what will happen if people don’t follow the E-Invoicing rules with the release of Cabinet Decision No. 106 of 2025 on Violations and Administrative Penalties.
As E-Invoicing becomes more popular, this blog explains each penalty in simple terms and highlights the most common risks that businesses may face. It also goes into more detail about what needs to be done to avoid fines.
Why the UAE Put in Place Penalties for E-Invoicing
Why these punishments should be used:
- To make sure that all UAE businesses follow the same rules for billing
- To make sure the invoice gets adopted right away
- To stop people from making fake or wrong invoices and cut down on tax evasion
- To make sure that tax returns are correct overall
- To make it easy for businesses, suppliers, service providers, the FTA, and ASP reach out to each other.
To follow the rules, companies must set up e-invoicing technically and make sure that invoices are sent, received, and reported. They must also fix any system problems or mistakes that happen.
Penalties for E-Invoicing in UAE
A Look at Cabinet Decision No. 106 of 2025
This decision is about breaking the rules for the Electronic Invoicing System set out in Federal Decree-Law No. 28 of 2022 (Tax Procedures Law) and the Ministry of Finance’s e-invoicing laws that go with it.
Things to keep in mind: If the companies send out electronic invoices before it’s required, they won’t be getting in trouble. People who issue (sell) and people who receive (buy) can both be fined if they don’t follow the rules.
Fines for Not Following E-Invoicing Rules in UAE
The table that comes with Cabinet Decision No. 106 of 205 lists these fines.
- Not setting up the e-Invoicing System or choosing an ASP (Accredited Service Provider): AED 5,000 fine for every month or part of a month late.
This is true for companies does these:
- Fails to meet the deadlinedate for hiring the ASP.
- Failed to to connect the ERP/Finance software to the e-invoicing system.
- If the system isn’t set up to send structured electronic bills,
When e-invoicing first starts out, this is likely to be one of the most common mistakes people make.
- Penalty for not sending and receiving electronic invoices by the due date: AED 100 per invoice, up to a maximum of AED 5,000 per month
This is true for companies does these:
- Keeps sending PDF or paper bills instead of electronic ones
- Makes an invoice but doesn’t use the e-invoicing method to send it.
- Sends a statement that doesn’t pass technical validation and doesn’t send it again the right way.
- If you don’t send and issue electronic credit notes by the due date, you will be fined AED 100 per note, up to a maximum of AED 5,000 per month.
This is true when a company does these:
- Instead of using the e-invoicing method, send credit notes by hand.
- Credit notes can’t be sent through the system if they aren’t correctly linked to the original bill.
- Not telling the authority about any system failure AED 1,000 per day or part of a day
A system failure is any kind of technology problem that makes it impossible to file taxes or send data correctly. This could include problems with ERP or accounting software, the API link between the ASP and the FTA, hardware failures, data loss or corruption, or problems connecting to the internet or a network.
If a company has any of these problems and doesn’t tell the Authority right away, they will be fined every day until the problem is officially reported.
- If the recipient doesn’t tell the authority about a system failure, they will be fined AED 1,000 per day or part of a day.
Buyers need to report any issues that stop them from getting or confirming e-invoices.
- If you don’t tell the ASP about changes to registered data, you will be fined AED 1,000 per day or part of a day.
When there are changes to:
- Information on trade licenses
- Legal Name of the company Address and how to reach them
- Numbers for tax registration
- ERP or other changes to the system
- Online billing
How to Stay Away from E-Invoicing Fines
- Find an Accredited Service Provider (ASP) as soon as possible.: Don’t wait until the last minute; getting set up and trained takes time.
- Plan how you will send invoices: Make sure that all sales, credit notes, returns, and business between companies are done online.
- Make your ERP better: Structured XML bills must be able to be sent from your system in real time.
- Teach your staff: The IT team, the sales team, the accounts team, the buying team, and the billing team all need to know what their job is.
- Keep an eye on compliance screens: ASPs give you tools to pick out failed bills quickly.
- Maintain a plan for when the system fails: Keep an easy-to-use method for finding system problems, reporting them to the FTA, and working on fixing them.
Prepare with MadronoAI Today
If you want to avoid losing money because of e-invoicing fines, get in touch with MadronoAI for a free compliance audit and penalty risk assessment.
From pilots to full rollout, our UAE experts will make sure there are no violations and that auditors have faith in your system. Make an appointment for your consultation now to avoid penalties in 2026.