What Information Must be Included in Your Tax Invoice In UAE?
Since the commencement of value-added tax (VAT) from January 1st, 2018, the format of the invoices or bills that usually exchange hands between seller and buyer will change and it is not limited to the inclusion of VAT at five percent on the invoice alone but many other elements also need to be incorporated in invoices in line with Article 59 of Executive Regulations of the VAT Law.
As per the law, invoices should not display "invoice" or "bill"; rather, "tax invoice" should be clearly displayed on it. Also, the tax registration number (TRN) issued to the supplier or seller should also find a place on invoices along with addresses.
The FTA said that four items on the receipt should be clearly marked:
- Tax receipt displayed
- Tax registration number
- Price that includes VAT
- Amount of VAT added
In a brief statement, the FTA called on consumers "to review tax invoices as businesses can’t charge VAT if they were not registered".
For issuing a tax invoice the following conditions must be met:
- A consecutive serial number not exceeding 16 characters, in one or multiple series, containing letters or numerals or special characters (hyphen or dash and slash symbolized as “-” and “/” respectively) and any combination thereof, unique for a financial year.
- Address and name of the recipient and the address of delivery, along with the name of state and its code, if such recipient is unregistered and where the value of taxable supply is Rs 50,000 or more.
- Quantity, in case of goods and unit or Unique Quantity Code thereof.
- Total value of supply of goods or services or both.
- Taxable value of supply of goods or services or both, taking into account discount or abatement, if any.
- Rate of tax (central tax, state tax, integrated tax, union territory tax, or CESS).
- Amount of tax charged in respect of taxable goods or services (central tax, state tax, integrated tax, union territory tax or CESS).
- Place of supply along with the name of the state, in case of a supply in the course of inter-state trade or commerce.
According to the guidelines issued by the Federal Tax Authority (FTA) in relation to the contents of the UAE VAT Tax Invoice, there are two types of Tax Invoice:
Simple VAT Invoice will be for supply less than the specified amount. It is issued in the case when the customers are retail consumers and don’t need to provide a VAT number. This type of invoice is for supermarkets and other retail industries.
Detailed VAT Invoice will be for supply more than the specified amount. It is issued in the case when registered business supplies to another registered user. This type of invoice is for wholesalers and traders dealing in bigger quantities.
What are the key contents of a Tax Invoice?
Contents of tax invoices are classified on the basis of simplified and detailed tax invoices as follows:
1. Simple VAT Invoice
- A simple VAT Invoice must the word “Tax Invoice” at a prominent place.
- It must consist the details of the supplier. Name, Address and Tax Registration Number (VAT Number).
- In addition to the above, it must contain, Date of issue of the tax invoice.
- The complete description of goods supplied must be included.
- Apart from that, the most important thing a simple VAT invoice must have is the Total Amount Payable and Total VAT Chargeable.
2. Detailed VAT Invoice
In addition to the above details that are in simple tax invoice, a detailed VAT Invoice will consist of the following details:
- Name, address, and TRN of the recipient.
- A unique invoice number
- Date of Supply, if it is different from the date of issue.
- Price per unit, the supplied quantity/volume, rate of tax and the payable amount in AED.
- Discount, if applicable.
- Payable Gross value of Invoice in AED.
- Payable Tax Amount in AED.
- Statement relating to Reverse Charge, if applicable.
How can a business entity avoid errors in a Tax Invoice?
According to the law of VAT, all registrants should offer sufficient details in the tax invoice in UAE, this should not be incomplete or contain any wrong details otherwise the registrant would be responsible to make payment of administrative penalty. The right method to make sure that the invoice contains all the necessary details according to the law is to utilize software that will notify the user if any kind of detail isn’t involved and this will also help in making changes to the invoice according to the updates brought in the laws. Utilizing such software would save the registrant from making payment of a penalty and issue the invoice to the recipient in a timely manner.
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Failing to comply with the requirements of tax invoice under VAT in the UAE will lead to hefty penalties which call for the need to hire the best Tax Agent in Dubai. Our company is well-known for providing specialized tax services such as UAE VAT registration, VAT deregistration, VAT compliance / VAT Return, excise tax services, and services related to VAT reconsideration etc. We ensure that businesses get efficient services through a dedicated team of VAT specialists and approved tax agents in Dubai, UAE. With our efficient VAT services in Dubai, UAE and a registered Tax Agent in Dubai, UAE the businesses ensure compliance with all the existing laws.