Step-by-Step Guide: How to Raise a VAT-Compliant Invoice in UAE
Raising invoices may appear to be a simple task, but it involves more than just listing the goods or services and their prices. According to VAT laws in the UAE, a business must obtain VAT registration if its supply exceeds the threshold limit of 375,000 AED in the previous twelve months. Upon obtaining VAT registration, a tax-compliant invoice has to be shared. The tax compliant invoice must bear all the below mandatory components.
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- Tax invoice:
The words “Tax invoice” must be clearly displayed on the invoice.
- TRN (Tax Registration Number):
TRN is allotted by the FTA on registering for VAT. This unique number must be clearly mentioned in the invoice for easy identification by the FTA and customers.
- Supplier’s details:
The business’s full name and address must be mentioned at the top of the invoice. Ensure that the name matches the trade license.
- Invoice details:
- Each invoice must have a unique identifier for easy tracking. It is advisable to have a sequential, consecutive number for each of the financial years.
- The date of invoice must be mentioned correctly. Along with this, it should also be noted that the tax invoice must be issued within 14 calendar days of the supply date.
- If the date of supply is different from the date of invoice, then the date of supply is also to be incorporated in the invoice.
- Customers details:
The full name, address, and TRN must be mentioned at the top of the invoice. Further, on receipt of the customer TRN, cross-check if the TRN is active in the FTA portal.
- Details of Goods/Services:
- Provide a clear description of goods or services.
- The quantity of goods or services and price per unit must also be included in the invoice.
- VAT details:
- The VAT amount charged, its rate, and the total amount of VAT must be mentioned in the invoice.
- The final invoice value is also to be included in the invoice.
- Currency exchange rates:
If the invoice is issued in currency other than AED, then the currency exchange rate and the converted value must be mentioned in the invoice. The conversion must be based on the exchange rate published by the UAE Central Bank on the date of supply.
- Due date and payment terms:
The payment terms, such as the due date of payment along with bank details, can be mentioned in the invoice. Though these details are not mandated by the VAT laws, they are recommended as it avoids delays in receipt of payment.
- VAT on reverse charge:
If an invoice relates to supply that attracts VAT on reverse charge, then the statement that the recipient must self-account for the tax and reference to the relevant legislation must be disclosed in the invoice.
Also Check What Documents Are Required For Corporate Tax Registration in Dubai, UAE
The businesses are provided an option to use a simplified VAT invoice when the total consideration is less than AED 10,000. Such invoices can be less detailed but still must show key information like TRN, total value, description of goods or services, date of tax invoice, words “tax invoice” and VAT charged.
However, businesses that are not registered under VAT law can also include all the above details except for the words “tax invoice” and TRN of the supplier. This ensures the business includes best practices.
We, at BCL Globiz, understand that following and designing the processes for invoicing could be overwhelming. You can reach out to our experts at punith@bclglobiz.com to avail any professional assistance for your business.
