As the UAE readies itself for the organized form of electronic invoicing, one question being asked by many business owners is quite simple: who is applicable for e invoice requirements?
This is not a question that is purely technical in nature. It has a direct impact on how your business will be sending out invoices in the coming days and weeks.
Let’s put this into perspective in simple terms.
E-invoicing in the UAE is being organized in a structured manner. This means that invoices will be sent out in an electronic manner in a standardized format via approved platforms. This is not about sending an email with a PDF attachment. This is about organizing the process of invoicing in a digital manner.
As such, it is only natural that the next question being asked is: who exactly will be required to follow this process?
The answer to this question is largely based on VAT registration.
If your business is registered for VAT and you are sending out tax invoices for taxable supplies, you will likely fall under who is applicable for e invoice requirements.
This is because the e-invoicing system is intricately connected to the VAT system. Those businesses that are already required to issue VAT-compliant tax invoices constitute the main group of e invoicing applicable entities.
If VAT is applicable to your business transactions, then structured e-invoicing is also likely to be applicable to you.
Now, with regard to the VAT threshold, businesses are required to register for VAT as soon as their taxable supplies exceed the mandatory registration threshold as provided for in UAE VAT law.
Once registered, they will be included in the VAT system and, by extension, in the group of e invoicing applicable entities.
Therefore, the actual trigger is not the size of the company. The trigger is the VAT registration status.
Applicable Business Types
To clarify, the following types of businesses are likely to fall within the category of who is applicable for e invoice:
- Mainland companies that are registered for VAT.
- Free zone companies that are registered for VAT.
- Trading businesses that supply taxable goods.
- Service providers who charge VAT on services.
- Consultants, contractors, and professional firms who issue tax invoices.
These businesses constitute the main group of e invoicing applicable entities under the new system.
It does not matter whether your business is small or large. A small VAT-registered consultancy business can fall under the same rules as a large trading organization. The rules are based on VAT registration and taxable activity, not the number of employees or revenue size alone.
On the other hand, non-VAT registered businesses may not necessarily fall under who is applicable for e invoice requirements. However, as the system develops, the scope may widen in stages. This is why it is essential to keep up to date and check the announcements.
In practice, if your business currently issues tax invoices today based on VAT regulations, you must be ready for organized e-invoicing tomorrow.
Knowing who is applicable for e invoice well in advance will enable you to check your systems and accounting software in advance. This will make the process easier when it becomes fully operational.
FAQs
1. Who is applicable for e invoice in UAE?
The companies that are VAT-registered and issue tax invoices for taxable supplies are the general answer to who is applicable for e invoice in the UAE.
2. Are free zone companies included among e invoicing applicable entities?
Yes. If a free zone company is VAT-registered and makes taxable supplies, it will most probably be included in the e invoicing applicable entities.
3. Does company size affect who is applicable for e invoice?
No. The criteria are not based on the size of the company. Any VAT-registered business that issues tax invoices will fall into the criteria of who is applicable for e invoice.
4. Are non-VAT registered businesses e invoicing applicable entities?
Generally, non-VAT registered businesses will not fall into the category of e invoicing applicable entities. However, future changes should be followed.