E-invoicing is becoming the new standard for businesses in the UAE. It replaces traditional paper or PDF invoices with a digital format that is faster, more accurate, and aligned with government requirements. The ministry of Finance has decided that they will make this initiative mandatory in July 2026.
In this article, we’ll explain how UAE businesses can generate e-invoices under the new system, how the process has changed, and what you need to get started. Whether you're ready for compliance or simply want to modernise your billing, this guide will make the transition easy to understand.
The current invoicing process
Before we dive into e-invoicing, let’s understand how invoices were traditionally created:
- Manual entries: Most businesses used to rely on accounting software or Excel to manually create invoices.
- PDF or paper format: Invoices were usually shared via email as PDFs or printed on paper.
- No government integration: These invoices were not directly linked with any government platform or tax authority.
- Limited tracking: Once an invoice was issued, there was no centralised way for the government to track or verify it in real time.
Now let us have a look at the new process that will be followed after the implementation of e-invoicing.
A step-by-step guide to generating compliant e-Invoices
With the UAE's move to a digital tax framework, generating e-invoices has become a structured, system-driven process. While the mandatory rollout is set for July 2026, preparing now ensures a smooth transition. Here’s a detailed breakdown of how to generate an FTA-compliant e-invoice.
Step 1: Select an FTA-accredited e-invoicing system
Your first step is to choose a software that can create and manage e-invoices according to government standards. Not all accounting software is automatically compliant. Your chosen system must:
- Support structured formats: It should be able to generate invoices in machine-readable formats like XML or UBL, as required by the new system.
- Integrate with Accredited Service Providers (ASPs): The UAE's e-invoicing model requires invoices to be transmitted through an ASP. Your software needs to connect with one of these providers.
- Validate invoice data: The system should have built-in checks to ensure all mandatory information is included before transmission.
- Store invoices securely: It must be capable of storing digital invoices for at least five years to meet audit requirements.
For businesses operating within a VAT group (a group of companies registered under a single Tax Registration Number (TRN), each entity must have its own connection to an ASP, though they will use the group’s shared TRN.
Step 2: Generate the e-invoice with all mandatory fields
Once your system is ready, you can create an e-invoice. This process involves entering specific details that are crucial for compliance. Ensure every invoice includes the following mandatory fields:
- Supplier details: Your business name, address, and Tax Registration Number (TRN).
- Buyer details: Your customer’s name, address, and TRN (if they are registered for VAT).
- Invoice identification: A unique, sequential invoice number and the date of issue.
- Description of goods/services: A clear description of what was sold, including quantity and unit price.
- VAT breakdown: The applicable VAT rate (5%, 0%, or Exempt) and the total VAT amount clearly stated.
- Currency and totals: The final amount must be in AED. If another currency is used, the exchange rate must be shown.
- QR code: For certain invoices, a QR code may be required for quick validation and tracking.
Initially, these rules apply to B2B and B2G (Business-to-Government) transactions. B2C (Business-to-Consumer) requirements are expected to be included in later phases.
Step 3: Validate and transmit the e-invoice through an ASP
After creating the invoice, it cannot be sent directly to the customer. It must first be validated and transmitted via an Accredited Service Provider (ASP). This is a key difference from the old process. Here’s how it works:
- Submission: You generate the invoice in your compliant software.
- Validation: The ASP’s system automatically checks the invoice to confirm all mandatory VAT details are present and correctly formatted.
- Transmission: The sending ASP securely transmits the validated invoice over a certified network (like Peppol) to the buyer's ASP.
- Delivery: The buyer’s ASP delivers the e-invoice directly into their accounting system.
- FTA reporting: Simultaneously, the ASP sends an extract of the invoice data to the Federal Tax Authority (FTA) in real-time for compliance monitoring.
This model ensures every invoice is standardized, secure, and visible to the tax authorities from the moment it is issued.
Step 4: Securely store e-invoices for compliance
Both the supplier and the buyer are legally required to store a digital copy of the e-invoice for a minimum of five years.
- For suppliers: You must maintain a complete digital record of all issued invoices for VAT reporting and potential audits.
- For buyers: The e-invoice data received from your ASP automatically populates your accounting system, creating a reliable record for input tax recovery.
Your e-invoicing software or ASP should provide secure, FTA-compliant storage solutions.
Step 5: Link e-invoice data to VAT returns
A major advantage of the e-invoicing system is its integration with tax reporting. The real-time data shared with the FTA simplifies VAT filing.
- Automated VAT returns: Invoice data is automatically captured and can be used to pre-fill or validate your VAT returns, reducing manual errors and ensuring accuracy.
- Seamless Integration: Your e-invoicing system can be linked with your broader ERP and accounting software, streamlining financial management and reconciliation.
- Real-time monitoring: The FTA can access e-invoice data for continuous tax monitoring, which supports a more transparent and efficient audit process.
E-invoicing is quickly becoming the new normal for businesses in the UAE. While the process may seem technical at first, it’s actually quite easy once you have the right system in place. From faster billing to better accuracy and compliance, electronic invoices offer many benefits that can save time and reduce hassle. By understanding the rules and avoiding common mistakes, your business can smoothly shift to the new e-invoicing system and stay ahead of tax requirements.
