The UAE is moving towards a fully digital VAT compliance framework. The Federal Tax Authority (FTA) has officially confirmed that E-Invoicing will become mandatory, with a phased implementation starting in 2026.
This initiative marks a significant shift in the UAE’s tax administration system, aiming to enhance transparency, efficiency, and regulatory compliance.
1. What Is E-Invoicing in the UAE?
E-Invoicing in the UAE refers to the electronic generation, exchange, and reporting of invoices in structured, machine-readable formats.
This Includes:
- Generating invoices in structured digital formats
- Transmitting invoices through FTA-accredited E-Invoicing service providers
- Real-time or near real-time reporting of invoices to the FTA
- Secure digital storage of invoices for audit and compliance purposes
Important clarification:
- Scanned invoices, handwritten invoices, and standard PDF invoices will not be accepted, Only invoices issued in XML or JSON structured formats will be considered valid once the mandate comes into effect.
2. UAE E-Invoicing Rollout Timeline
The UAE has adopted a phased approach to allow businesses sufficient time to prepare.
Phase 1: July 2026 – Voluntary Preparation Period
- Businesses may begin onboarding with accredited E-Invoicing providers
- Accounting and billing systems should be upgraded to support structured invoice formats
Phase 2: January 2027 – Mandatory for Large Businesses
This phase applies to businesses with:
Annual revenue of AED 50 million or more, Affected entities must:
- Issue B2B and B2G invoices electronically in XML or JSON format
- Integrate their billing systems with FTA-accredited E-Invoicing platforms
- Enable real-time reporting of invoices to the FTA
Phase 3: July 2027 – Mandatory for Small and Medium Enterprises (SMEs)
All VAT-registered SMEs will be required to comply, including:
- Retail businesses
- General trading companies
- Service providers
- Contractors
- Freelancers and sole establishments (if VAT registered)
Phase 4: October 2027 – Government Entities
All UAE government entities must issue and receive invoices exclusively through the E-Invoicing system.
3. Transactions Covered Under E-Invoicing
The initial scope of E-Invoicing will include the following transactions:
B2B – Business to Business
Examples include:
- Supplier to company
- Contractor to developer
- Service provider to corporate client
B2G – Business to Government
Any invoice issued to UAE government departments or authorities.
B2C – Business to Consumer
Retail invoices issued to individual consumers are not included in the initial phases.
The FTA may expand the scope to include B2C transactions at a later stage.
4. Approved E-Invoice Formats
Once E-Invoicing becomes mandatory, only the following structured formats will be accepted:
- XML
- JSON
These formats enable:
- Automated validation
- Digital signatures
- Real-time verification
- Accurate and efficient data extraction
The following formats will not be accepted:
- Paper invoices
- Scanned copies
- Standard PDF invoices
