Article on Electronic Invoicing System in UAE: Scope and Manner of Implementation

1.Background

The Ministry of Finance, UAE issued two Ministerial Decisions, 243 and 244 of 2025 on 29th September 2025 establishing the scope and phased implementation of the country’s electronic invoicing (eInvoicing) system. These decisions act as a significant step toward digitalizing tax compliance and enhancing transparency across business transactions.

The system will be implemented in phases, beginning with a pilot program in July 2026 and followed by mandatory implementation based on taxpayer’s size and type.

The mandate applies to all business transactions conducted in the UAE, with specific exemptions for government transactions in a sovereign capacity, certain airline services and financial services exempt from VAT or subject to Zero rate.

2.Scope of Application and obligations of persons subject to Electronic Invoicing System (Ministerial Decision 243 of 2025)

The purpose of this Decision is to establish the scope of application of the Electronic Invoicing System in UAE and prescribe the obligations of the Persons subject to the Electronic Invoicing System.

Ø  Applies to all business transactions in the UAE, with limited exclusions.

Ø  The Issuer and the Recipient, as applicable, shall appoint an Accredited Service Provider. The list of the Accredited Service Providers shall be published by the Ministry.

Ø  The system requires taxpayers to issue invoices and credit notes electronically through accredited service providers

Ø  The Electronic Invoice and Electronic Credit Note shall contain all the data fields and particulars, as prescribed by the Ministry.

Ø  The Electronic Invoice or Electronic Credit Note must be issued and transmitted by the Issuer to the Recipient through the Electronic Invoicing System within 14 days from the Date of Business Transaction.

Ø  The Recipient may issue an Electronic Invoice or an Electronic Credit Note on behalf of the Issuer in respect of a supply of goods or services provided both the Recipient and Issuer are Registrants, in accordance with the conditions prescribed in the VAT Executive Regulation.

Ø  Any Person subject to the Electronic Invoicing System shall store all Electronic Invoices, Electronic Credit Notes, and any associated data within UAE in accordance with the timeline prescribed under the Tax Procedures Law. The Authority shall have the power to share any such data with other government authorities or foreign government bodies pursuant under any international tax agreements.

3.Implementation Timelines (Ministerial Decision 244 of 2025)

This Decision applies to any Person subject to the Electronic Invoicing System in UAE and any Person who implements the Electronic Invoicing System on a voluntary basis.

i.   Pilot programme:

Any Person notified by the Ministry shall comply with all the technical requirements established by the Ministry and the Authority for the use of the Electronic Invoicing System. The Pilot Programme shall commence on 1 July 2026.

ii.  Voluntary implementation:

Any Person may implement the Electronic Invoicing System on a voluntary basis as from 1 July 2026 and shall, in that case, comply with all the technical requirements established by the Ministry and the Authority for the use of the Electronic Invoicing System.

iii. Mandatory rollout in phased manner:

Entities with ≥ AED 50 million revenue:

Ø  Appoint accredited service provider by July 31, 2026

Ø  Implement Electronic Invoicing System by January 1, 2027

Entities with < AED 50 million revenue:

Ø  Appoint accredited service provider by March 31, 2027

Ø  Implement Electronic Invoicing System by July 1, 2027

Government entities:

Ø  Appoint accredited service provider by March 31, 2027

Ø  Implement Electronic Invoicing System by October 1, 2027

 iv. Business-to-consumer (B2C) transactions:

Exempt until further notice.

4. How eInvoicing system operates

The eInvoicing system will utilize the Open Peppol network, operating as a decentralized continuous transaction control and exchange system. The invoices will be  issued and received using the Peppol network.

The validation of invoices will be the responsibility of the issuer's eInvoicing solution provider, who will also report the invoices to the Ministry of Finance and the Federal Tax Authority. Only accredited solution providers will be permitted to send validated invoices to the Federal Tax Authority.