VAT and e-invoicing in the UAE (2026): rules and timeline

VAT in the United Arab Emirates is charged at 5% and administered by the Federal Tax Authority (FTA, الهيئة الاتحادية للضرائب), while the Ministry of Finance (MoF) sets the rules for the new e-invoicing system. 2026 brings two things to plan for: amendments to the VAT Decree-Law in force since 1 January 2026, and the countdown to mandatory e-invoicing, which starts on 1 January 2027 for the largest businesses and on 1 July 2027 for everyone else. This guide covers the rates, registration, returns, tax invoice details, the e-invoicing timeline and a worked example in dirhams. Rules are as of October 2026.

VAT in the UAE at a glance

The law is Federal Decree-Law No. 8 of 2017 on VAT and its Executive Regulation (Cabinet Decision No. 52 of 2017), both amended several times. Some transactions between companies in designated free zones may be outside VAT; services inside free zones follow the general rules.

What changed on 1 January 2026

Federal Decree-Law No. 16 of 2025 amended the VAT law from 1 January 2026:

• Reverse charge: you no longer have to issue a tax invoice to yourself when you import goods or services under the reverse charge. You still account for the VAT and keep the supporting documents.
• Refund time limit: excess recoverable VAT can be refunded or offset only within five years. There is a transitional window until 1 January 2027 to claim older balances whose five-year period has expired or expires before that date.
• Tax evasion: a new article lets the FTA refuse the deduction of input VAT where the supply, or the supply chain, is linked to tax evasion, so know your suppliers.

Who must register for VAT

• Mandatory registration: when your taxable supplies and imports in the last 12 months exceed AED 375,000, or you expect them to exceed it in the next 30 days.
• Voluntary registration: when your taxable supplies, imports or taxable expenses exceed AED 187,500 in the last 12 months or are expected to in the next 30 days.
• Non-resident businesses have no threshold for supplies on which they must charge UAE VAT.
• Once registered you receive a Tax Registration Number (TRN), which goes on every tax invoice. VAT groups are possible if the conditions are met.

VAT returns and payment

• Tax period: the standard tax period is three calendar months; the FTA can assign a monthly or other period.
• Deadline: the return must reach the FTA, and the VAT must be paid, no later than the 28th day after the end of the tax period.
• Example: for the quarter January to March, the return and payment are due by 28 April.
• Access: FTA services, including returns, are used through UAE Pass.

What a UAE tax invoice must show

Article 59 of the Executive Regulation lists the contents of a full tax invoice:

1. 1The words “Tax Invoice”, clearly displayed
2. 2Your name, address and TRN
3. 3The customer's name, address and TRN, where the customer is registered
4. 4A sequential tax invoice number, or a unique number that identifies the invoice and its place in the sequence
5. 5The date of issue
6. 6The date of supply, if different
7. 7A description of the goods or services
8. 8For each item: unit price, quantity, VAT rate and amount payable in AED
9. 9Any discount offered
10. 10The gross amount payable in AED
11. 11The VAT charged in AED, with the exchange rate used if the invoice is in another currency
12. 12Where the customer must account for the VAT under the reverse charge, a statement saying so and the article of the law

The rules around it:

• Deadline: issue the tax invoice within 14 days of the date of supply. A summary tax invoice for several supplies to the same customer is due within 14 days of the end of the month.
• Simplified tax invoice: allowed (except under the reverse charge) when the customer is not registered, or when the customer is registered and the supply is AED 10,000 or less. It shows the words “Tax Invoice”, your name, address and TRN, the date, a description, and the total and the VAT in AED, and it is issued on the date of supply.
• Foreign currency: you may invoice in another currency, but the VAT and the gross amount must also be shown in AED. Under e-invoicing, the conversion uses the Central Bank exchange rate.
• Tax credit notes (Article 60): to reduce an invoice, issue a document headed “Tax Credit Note” with your and the customer's details, the date, the original value, the corrected value, the difference and the VAT on it in AED, a short reason, and enough information to identify the original supply.
• Rounding: VAT may be rounded to the nearest fils.
• Records: keep records for five years after the end of the tax period they relate to, seven years for real estate records, and longer if there is a dispute or an audit.

E-invoicing in the UAE: who and when

The UAE is introducing e-invoicing through a decentralised five-corner model on the Peppol network (the UAE calls it Decentralised Continuous Transaction Control and Exchange, DCTCE). Invoices are exchanged as structured XML files in the UAE's PINT AE format through an Accredited Service Provider (ASP), and the data is reported to the FTA. A PDF or paper invoice will no longer be a valid tax invoice for a business in scope.

Key points:

• Revenue means the gross income in your most recent accounting period, based on your financial statements.
• Scope: every business transaction (B2B and B2G) by a person doing business in the UAE, whether or not it is registered for VAT. Each business appoints one ASP for both sending and receiving.
• B2C is excluded: sales to consumers who are not in business are outside the system until the Minister decides otherwise, and a business that sells only to consumers is not in scope.
• Exclusions include sovereign government activities, international passenger flights ticketed by airlines and VAT-exempt financial services.
• Storage: e-invoices and their data must be kept within the UAE for the record-keeping periods above.
• Penalties: a Cabinet Decision sets administrative penalties for e-invoicing violations, and failing to issue a tax invoice or credit note in the required form is itself penalised under the VAT law.

The MoF publishes the list of accredited providers. Clientlly is not an Accredited Service Provider: when e-invoicing applies to you, the e-invoice exchange must go through an ASP you appoint.

Worked example in dirhams

A small interior design studio files for the quarter January to March 2026:

• Sales: AED 120,000 of services before VAT. Output VAT at 5%: 120,000 × 0.05 = AED 6,000. Clients pay AED 126,000.
• Purchases: furniture samples and software for AED 40,000 plus AED 2,000 VAT, backed by tax invoices.
• VAT due: 6,000 − 2,000 = AED 4,000, filed and paid by 28 April 2026.

To find the VAT inside a price: AED 2,100 × 5 ÷ 105 = AED 100.

Common mistakes

1. 1Waiting for the end of the year to check the threshold. The test is the last 12 months and the next 30 days, every month.
2. 2Issuing a simplified tax invoice to a registered customer above AED 10,000. They need a full tax invoice to recover the VAT.
3. 3Showing the VAT only in the invoice currency. The VAT and gross amount must also be in AED.
4. 4Leaving old refund claims too long. Excess recoverable VAT now has a five-year limit.
5. 5Assuming e-invoicing is only for VAT-registered businesses. Registration status does not matter; B2B transactions are in scope.
6. 6Appointing an ASP at the last minute. Larger businesses had to appoint one by 30 October 2026; the rest by 31 March 2027.

How Clientlly helps

Clientlly numbers your invoices sequentially in each series, applies the UAE's VAT rate on every invoice and links credit notes to the original invoice. It keeps sales and purchase VAT books per rate, including exports and reverse charge, reads the VAT from scanned purchase receipts, and prepares tax reports for you and your accountant with Excel and PDF exports. You can invoice in multiple currencies, send the PDF in your client's language with a card payment link, set up recurring invoices, and let automatic reminders go out 3, 14 and 30 days after the due date. See the invoicing module and the accounting module.

Clientlly does not connect to the UAE e-invoicing network and is not an Accredited Service Provider: once the mandate applies to you, the e-invoice exchange itself needs an ASP.