In the UAE e-invoicing architecture, the MLS plays a key role in confirming an invoice's validity and the compliance of tax data. MLS is a one-directional status alert that indicates whether action is required in the event of rejection or whether the invoice can proceed for further processing. MLS is important for ensuring data integrity, compliance, and transparency, as access points communicate to ensure that electronic invoice data is correctly issued, exchanged, and delivered. MLS is an integral part of the framework and contributes to effective electronic invoicing.
What is MLS?
MLS is a confirmation message which communicates the validity and receipt of electronic invoice data between ASPs. The FTA also uses the MLS to confirm receipt of tax data by the supplier ASP and the buyer ASP. MLS is created and sent by ASPs and is based on Message Level Response (MLR) in the PEPPOL UAE DCTCE framework. MLS messages must never be used as responses to other MLS or MLR messages. In the UAE e-invoicing system, MLS is sent via the PEPPOL network and indicates acceptance or rejection based on whether the data complies with the regulations issued by the Ministry and the Authority.
MLS responses
The MLS acknowledgement indicates the result of checking the invoice data and electronically validating each invoice. It provides either of the following three statuses at any given point in time.
- Accepted without confirmation of forwarding (AB): It means the e-invoice has been successfully validated by the buyer’s ASP but has not been forwarded to the buyer. It indicates that transmission is still ongoing and that the electronic invoice has not yet been delivered to the buyer.
- Accepted with confirmation of forwarding (AP): The e-invoice has been successfully validated by the buyer’s ASP and has been confirmed as forwarded to the buyer. It means the invoice passed all validation checks, was sent from the buyer’s ASP, and was delivered to the buyer.
- Rejected (RE): This response indicates that the electronic invoice contains issues such as errors, incorrect data entry, or formatting problems that caused it to fail the validation check. The MLS will include the reason for rejection, so the supplier can rectify it and resend the e-invoice for reprocessing and revalidation.
The MLS responses occur in reverse flow because they confirm the status back to the access point. As the electronic invoice is sent according to the UAE e-invoicing architecture, the MLS response follows the reverse order: it receives data and then responds with the status. This clarification through the alert ensures compliance, transparency, and efficient communication across the various access points.
Role of MLS in the e-invoicing framework
The MLS is part of the UAE e-Invoicing framework. It provides valuable feedback to the relevant parties on the status of the electronic invoice. In this manner, it facilitates communication between various corners of the UAE e-invoicing architecture and serves as an acknowledgement provider.
In the 5-corner architecture, when C2 transmits the e-invoice data to C3 and simultaneously reports the TDD to C5, C3 must verify the e-invoice's validity in accordance with the mandated regulations. In this scenario, either of the two situations can occur:
Successful validation
In the first case, C3 receives the e-invoice data from C2, and the validation is successful. C3 then sends a positive MLS (accepted) to C2, indicating that the rest of the process can continue. C3 also simultaneously reports TDD to C5 on this basis. C5 then sends a positive MLS to C2 once the TDD is successfully reported. C5 will also send an MLS to C3 upon successful TDD reporting. C2 then forwards the following to C1: the C3 exchange MLS and the C5 reporting MLS. Lastly, C3 forwards the C5 reporting MLS to C4.
Validation error
In the second scenario, C3 receives electronic invoice data from C2, but the validation fails. This can be due to many reasons, such as missing mandatory fields. When C3 is unable to validate the electronic invoice received from C2, it sends a negative MLS (rejected) to C2, indicating that the process must route back to C2. This directly informs C2 that the electronic invoice must be rectified and resubmitted by C1 to C3. At the same time, C3 reports a negative MLS to C5. C3 will not report TDD to C5 if this happens.
Types of MLS
The two types of MLS are as follows.
Reporting MLS
Reporting to the MLS occurs when the tax data document is confirmed by the Accredited Service Provider (ASP) and sent to the tax authorities, i.e., the FTA. Its purpose is to ensure compliance and reporting of the tax invoice to the FTA. The reporting MLS is generated once the TDD is successfully received. In the event of a failed confirmation, no reporting is submitted to the FTA.
Exchange MLS
The exchange MLS is used for validation purposes. It ensures that the e-invoice was successfully sent and received by partners. It can do either or both of the following: send a confirmation to the seller that the e-invoice was received, or that the Service Provider successfully sent the e-invoice to the buyer. It facilitates the invoice status between service providers and the first sender. In the event of a validation failure, a negative MLS status is returned.
Why MLS matters to UAE businesses?
MLS has a significant impact on the workflow of UAE businesses, even though it is a part of the UAE e-invoicing framework. Here is why MLS is important.
Provides confirmation of invoice status
MLS provides a digital, transparent status confirmation for electronic invoices. It verifies that the electronic invoice was validated and sent to the buyer. This prevents disputes and provides businesses with information on electronic invoice delivery, thereby enhancing workflow. This eliminates the need for manual follow-ups and provides instant to near real-time confirmation. It provides an audit trail and improves relationships between suppliers and buyers.
Error detection and rectification
MLS provides information on when the e-invoice is rejected. By communicating this to the supplier, the supplier can make changes to ensure the correctness and accuracy of the electronic invoice data. This enables businesses to fix problems as and when they occur. It expedites payments and ensures compliance. If MLS were not there, the incorrect invoice data would also have been sent to the FTA, which would then have rejected it and returned it to the supplier. MLS ensures seamless workflow efficiency.
Compliance
When the tax data document reaches the 5th corner, the tax authority access point, it sends MLS to both the supplier’s and buyer’s access points to inform them of successful TDD reporting. MLS confirms that the invoice data has been reported to the tax authority, ensuring compliance. MLS is instrumental in informing ASPs of successful tax data reporting. This prevents penalties from being levied for non-compliance.
