E-Billing System in UAE
UAE Targets E-Invoicing until 2026: Accreditation for Service Providers
The United Arab Emirates' electronic invoicing initiative is called the "E-Billing System". Legislation is being prepared by the government that will regulate electronic transactions, electronic accounting, as well as storage both in B2B as well as B2G markets. It will be extended further towards B2C markets as well in due course.
Enterprises as well as government entities will be served well with a new billing strategy wherein simplicity, standardization, and automation will permit near real-time trading of invoices. Additionally, they can offer seamless tax reporting to UAE Federal Tax Authority.
The implementation date is still subject to change. Potential implementation dates for consideration from the UAE government are:
2024 (fourth quarter): Service providers' requirements and certification procedures will be formulated.
2025 (Second Quarter): Publication of E-Invoice Legislation.
Second Quarter of 2026: Phase 1 of B2B and B2G E-invoicing
The UAE Ministry of Finance (MoF) laid out the key pillars of the future regime of e-invoicing regulation in its newly published Consultation Document:
- Implementation of Peppol to ease cross-border transactions and reduce friction.
- The Five-Corner Model implementation, with the tax agency as a Peppol Access Point to support exchanges of invoices.
- AE PINT Data Dictionary, for standardizing invoice data requirements.
Data Dictionary, as it is found in UAE E-Invoicing Consultation Document, provides a formalized description of key data elements (fields) as well as attributes, which gives an indication of most common types of invoices that are used within the country. Through standardizing them, it facilitates uniformity of various types of documents, making it possible for effortless integration as well as quick processing of e-invoices within the business ecosystem.
With this initiative, the Ministry of Finance aims to:
- Create a common benchmark – Develop fundamental data elements in e-invoices such that they are consistent across industry segments.
- Identify gaps and opportunities for improvement – Create new fields of data needed for operations, regulations, and analytics purposes.
- Gather industry expertise – Bring in accounting firms, e-invoicing software suppliers, as well as business leaders to design a feasible, scalable roadmap.
The results of this activity shall be instrumental in fine-tuning the ultimate model of e-invoicing that is robust, easy to operate, and well integrated with business processes, paving the way towards a more streamlined and transparent tax environment of UAE.
How electronic invoices operate in United Arab Emirates: DCTCE
The UAE e-invoicing architecture is a decentralized Peppol-based Continuous Transaction Control or CTC implementation. This is further referred to as the Peppol 5-corner approach.
The arrangement entails a five-corner model, encompassing the issuer, the recipient, as well as a central tax platform. The standard used is UAE Peppol PINT, hence both the sender and recipient should have certified Peppol Access Points, which will validate content and send it to the recipient. The issuer's Peppol Access Point will be used for transmission of the invoice to the tax authority. In this arrangement, the government platform is an invoice repository without conducting validation of invoices.
- The seller sends the invoice details to your certified service provider.
- The service provider transforms the document into standard UAE electronic invoice XML format.
- The buyer's seller is sent an e-invoice by the seller's supplier. And the buyer is sent it by the buyer's recipient.
- The service provider of the seller sends the tax details of the e-invoice to the central government platform simultaneously.
- The central government website provides a receipt success alert.
For the time being, sending electronic business documents is allowed provided that the recipient gives its consent to receive them in a format agreed with the issuer. They have to be prepared in compliance with given requirements and be stored in the same format as they were issued. It is necessary to comply with an electronic signature in order to guarantee authenticity as well as integrity of documents.
Together with administrations of each country, EDICOM continuously keeps track of countries' electronic invoicing regulations evolution and advancements.
e-Invoicing Background in the UAE
The Federal Tax Authority (FTA) revealed Federal Law Number 1 of 2006 on Business and Electronic Transactions, putting into action regulations related to electronic accounting, storage, and verification processes such as signing of documents and authorization.
It mandates that for all instances of electronic billing, only electronic invoices can be prepared and sent, with an electronic signature too. Such records must be stored electronically for ten years as well.
It is permissible to trade in electronic commercial documents provided the recipient has agreed to receive them in a selected format with an issuer. It must be drafted after following laid-down procedures to be stored in the same format as when they were first handed over. For ensuring authenticity as well as uniformity of documents, an electronic signature must be used.
The 2006 Federal Law aims for the following:
- For founding of foundations and demands of mandatory electronic procedures.
- Harmonize the process for preparing electronic invoices and drive innovation of technology infrastructures required for carrying out electronic procedures.
- Permit mutual document exchange with business partners as well as government authorities in a standardized, authenticated manner.