The UAE e-invoicing penalties for the e-invoicing system implementation are administrative. They are applied to taxpayers within the scope of the e-invoicing system mandate. The only taxpayers who are not subject to these penalties are those who voluntarily implement the e-invoicing system.
The objective of the penalties is to ensure higher compliance by both issuers and recipients of electronic invoices and electronic credit notes. It is imperative that taxpayers diligently follow the timelines set out in documents issued by the Ministry of Finance.
Scope of Cabinet Decision 106
The Decision’s provisions apply to the issuer and receiver that are under the scope of the e-invoicing system implementation in accordance with the Federal Decree-Law No. 28 of 2022. Anyone found to be in violation of the e-invoicing system implementation will be subject to an administrative penalty until the violation is resolved. Any person who issues, exchanges, and reports e-invoices and electronic credit notes voluntarily is not subject to the administrative penalties under the Cabinet Decision 106.
E-invoicing penalties in the UAE
The e-invoicing fines UAE are as follows.
Issuer’s failure to appoint an Accredited Service Provider
Failure to appoint an Accredited Service Provider by the mandatory date prescribed by the Minister will incur an administrative penalty of AED 5000 for each month of delay in the UAE under the e-invoicing system.
E-invoicing implementation failure
If the e-invoice issuer fails to implement the e-invoicing system within the timeframe prescribed by the Minister, they are liable to an AED 5000 penalty for each month of delay.
E-invoice transmission failure
If the e-invoice issuer fails to issue and transmit an electronic invoice to the receiver through the e-invoicing system within the Minister’s prescribed timeframe, they will be subject to an administrative penalty of AED 100 for each e-invoice. The maximum monthly penalty in this case is AED 5,000.
Electronic credit note transmission failure
An administrative penalty will be applicable if an issuer of an electronic credit note fails to issue and transmit an electronic credit note to the receiver through the e-invoicing system within the Minister’s prescribed timeframe. A penalty of AED 100 per electronic credit note applies, capped at AED 5,000 per calendar month.
The issuer’s failure to notify of a system problem
The e-invoice issuer must notify the Federal Tax Authority of any system failure within the timeframe prescribed by the Minister. Failure to do so will attract an administrative penalty of AED 1,000 for each day of delay until the issuer notifies the FTA.
The recipient’s failure to notify of a system problem
The recipient of an e-invoice must notify the Federal Tax Authority of any system failure on their end by the time prescribed by the Minister. An administrative penalty of AED 1,000 is applied for each day of delay, in accordance with Cabinet Decision 106.
Failure to notify ASP of changes
If an issuer or the receiver in the e-invoicing system fails to notify the appointed Accredited Service Provider of any data changes that occur with the Federal Tax Authority within the timeframe prescribed by the Minister, they will be subject to an administrative penalty. The penalty starts at AED 1,000 for each day of delay.
How businesses can avoid e-invoicing penalties
Persons and government entities subject to e-invoicing implementation can avoid the administrative penalties by ensuring the following.
Understand the ASP appointment timeline
The Accredited Service Providers must be appointed by persons and government entities in accordance with the timeline prescribed by the Ministry of Finance.
- Persons with an annual revenue of AED 50,000,000 or more should appoint an ASP by 31st July 2026.
- Persons with an annual revenue of less than AED 50,000,000 should appoint an ASP by 31st March 2027.
- A government entity must appoint an ASP by 31st March 2027.
Understand the e-invoicing implementation timeline
- The pilot programme will commence on 1st July 2026, and any person or government entity wishing to participate in implementing the voluntary e-invoicing system may do so.
- Persons with an annual revenue of AED 50,000,000 or more should implement e-invoicing by 1st January 2027.
- Persons with an annual revenue of less than AED 50,000,000 should implement e-invoicing by 1st July 2027.
- A government entity must implement e-invoicing by 1st October 2027.
Understanding the transmission and reporting timelines
- When using the e-invoicing system, the issuer must issue and transmit the electronic invoice or electronic credit note to the recipient within 14 days of the business transaction date.
- The issuer and recipient must notify the Federal Tax Authority within 2 business days of the system failure, starting from the date of the failure. The system failure includes any malfunction or disruption that causes system unavailability.
- The issuer and recipient must notify the Accredited Service Provider (in writing) if any change to the registered data occurs within 5 business days after the Authority’s confirmation is received.
The UAE’s Cabinet Decision 106 provides a thorough explanation of the various violations and their corresponding penalties. The penalties are applied either daily or monthly, depending on the violation. Taxpayers can avoid these penalties by ensuring they understand all the timelines prescribed by the Minister of Finance. They must ensure they appoint an ASP, implement the e-invoicing system, and report within the timeline. The administrative penalties do not apply to taxpayers who voluntarily implement e-invoicing. These penalties are enforceable once the e-invoicing system implementation becomes mandatory for applicable persons and government entities.
