Simplified Tax Invoice under VAT in UAE
A Simplified Tax Invoice is basically a simplified version of a Tax Invoice, in which fewer details are required to be mentioned, as compared to a Tax Invoice.
A Simplified Tax Invoice is to be issued by a registrant for taxable supplies of goods or services in either of the following 2 cases:
- a.The recipient is not registered under VAT or
- b.The recipient is registered under VAT and consideration for the supply does not exceed AED 10,000
Hence, Simplified Tax Invoices are the type of invoices to be issued by all registered businesses in UAE which supply to consumers or to registered businesses where the value of the supply does not exceed AED 10,000.
Understanding the details that are required to be given in a Simplified Tax Invoice is extremely important for such businesses. Let us understand this in detail:
Simplified Tax Invoice format
As per the mandatory details required, a sample format of a Simplified Tax Invoice is shown below
As you can observe, the details required to be shown in a Simplified Tax Invoice, are lesser as compared to a Tax Invoice. While both a Tax Invoice and Simplified Tax Invoice have to be prepared with the same heading 'Tax Invoice', a significant difference is that in the Simplified Tax Invoice, the recipient's details are not required.
Hence, a Simplified Tax Invoice is easier to prepare, as compared to a Tax Invoice. However, for retail businesses and businesses whose supplies to registrants are for a value less than AED 10,000, it is important to ensure that simplified tax invoices are issued for all taxable supplies of goods or services. Similar to a Tax invoice, Simplified Tax Invoices are important documentary proof of taxable supplies having taken place. These invoices will also serve as the basis for return filing by suppliers and for claim of input tax credit by registered recipients. For businesses which are required to issue Simplified Tax Invoices, using a VAT software which will automate the task of preparing the invoices, will make it easier. It is important to select a software which automatically prepares a Simplified Tax Invoice based on the nature of a transaction, fills the details required in a Simplified Tax Invoice and maintains the details of these invoices in a secure manner for future reference.