An invoice is a document provided by a seller to a buyer in a transaction between two parties, in order to request payment. An invoice serves as a record for the transaction and details each element of it.
Invoicing clients in the UAE
The UAE is one of the largest markets in the world. At a time when other markets remain static or are downsizing, Dubai, the largest city in the UAE, boasts a lot of potential growth in the coming years. Opportunity continues to grow in Dubai, as is illustrated by more than 42,000 business licenses being issued in 2020. As the number of businesses increase, it is inevitable that more businesses would need to invoice clients in Dubai.
In the UAE there are different rules that apply if you are invoicing a VAT registered customer or one who is not VAT registered. The UAE is also requiring all businesses to issue e-invoices, and from 2021 the government of the UAE will be fully digitized. The government encourages all business to use digital invoices, and as such, allows for e-signatures and digital certification to be given.
Issuing a tax invoice in Dubai
A vast amount of businesses in the UAE and in Dubai, deal with transactions for which a tax invoice is required to be issued. A tax invoice is an essential document that must be issued when a transaction of goods or services is made. A tax invoice in Dubai, is issued when the amount paid for the goods or services exceeds AED 10,000 ($2,722). In order to issue a tax invoice there are 2 requirements that must be met:
- The receiver of the invoice should be registered; and
- The value of the transaction must exceed AED 10,000.
Format of a tax invoice in Dubai
- The names of all parties;
- Registered address and TRN of the supplier;
- The invoice number;
- The date of supply;
- The nature of goods sold or service rendered;
- The quantity of goods sold or services rendered;
- The price per unit;
- If the amount of VAT is converted to AED from a different currency, the rate of exchange should also be included; and
- Total amount (including tax).
If a tax invoice does not contain the correct information or meet these requirements, it may lead to an administrative penalty being issued. It may be useful keeping all invoices issued, in an organized manner, as a buyer may be entitled to claim tax returns.
Simplified tax invoice
There are many businesses who supply goods or services to persons not VAT registered in the UAE. For such transactions the VAT law in the UAE provides for a ‘simplified tax invoice’ to be issued. This may include (but is not limited to): retailers, supermarkets, restaurants etc. It also includes the businesses whose turnover does not exceed the threshold limit of AED 10,000.
The requirements for a simplified tax invoice are similar to those for a VAT invoice, however less details are required. An important difference between the 2 invoices is that in a simplified tax invoice, the name and address of the recipient is not required. This element is important for those businesses who deal with a lot of different customers regularly, as it allows them to process their efficiently and keep record of it.
INS Global can help you invoice your clients
Our experts are able to ensure that all invoices issued are in accordance with the terms negotiated as well as local regulations. We further ensure that all the local invoicing requirements are met and all supporting documentation is provided, for tax and legal requirements. With more than 14 years’ experience, INS Global is well equipped to assist you in doing business across the globe.