Types of VAT Invoices in the UAE: Tax vs Simplified Guide

The Federal Tax Authority outlines requirements for VAT invoicing in the UAE. Every VAT-registered business must issue invoices in the correct format with all required details to stay compliant and avoid penalties.

The UAE VAT system categorizes invoices into two types: tax invoices and simplified tax invoices. The choice of invoice type depends on the nature and value of the transaction. 

This blog explains when to use each format and the specific information that must be included in each.

Types of VAT Invoices in the UAE

The UAE VAT law classifies invoices into two formats based on the transaction type and value:

• Tax Invoice
  Issued for business-to-business supplies, especially when the total value crosses AED 10,000.

• Simplified Tax Invoice
  Used for business-to-consumer transactions or for low-value B2B sales below AED 10,000.

  Tax Invoice  

• A tax invoice is a legal document that records the sale of taxable goods or services between VAT-registered businesses.

UAE law requires a tax invoice when:

• Both supplier and buyer hold VAT registration
• The value of goods or services crosses AED 10,000

For smaller transactions under AED 10,000, businesses may still issue a tax invoice or switch to a simplified format based on the case.

In reverse charge supplies, the invoice must clearly state that the buyer will handle the VAT.

Mandatory Fields in a Tax Invoice

Each tax invoice must include specific details as set by the Federal Tax Authority. So, businesses must include the below

• The words “Tax Invoice” in a clear and visible place
• Name, address, and Tax Registration Number (TRN) of the supplier
• Name, address, and TRN of the buyer (if registered)
• A unique and sequential invoice number
• Date of issue
• Date of supply, if it differs from the invoice date
• A clear description of the goods or services supplied
• Quantity, unit price, and total amount excluding VAT
• Applied VAT rate and the amount of VAT charged
• Any discounts offered, if applicable
• Total amount payable including VAT
• A note for reverse charge, if the supply falls under that rule

Simplified Tax Invoice

A simplified tax invoice is a basic version of a tax invoice used for low-value or retail transactions.

UAE law allows a simplified tax invoice when:

• The buyer is not registered for VAT
• The buyer is registered, but the supply value is below AED 10,000

This format contains fewer details compared to a full tax invoice but still confirms VAT on the transaction.

Mandatory Fields in a Simplified Tax Invoice

The Federal Tax Authority has listed specific details that every simplified tax invoice must include. So, businesses must include the below:

• The title “Tax Invoice” in a clear and visible place
• Supplier’s name, address, and Tax Registration Number (TRN)
• Date of issue
• Description of the goods or services supplied
• Total amount payable (including VAT)
• VAT amount clearly shown

Summary: When to Issue a Tax or Simplified Invoice

E-Invoicing Becomes Mandatory in UAE

Now, the UAE government wants businesses to use e-invoices to send and receive invoices in a structured format via a secure network. So, businesses need to prepare for this by adopting e-invoicing software and training their team on the e-invoicing system before the deadline.  

Key Dates to Remember:

• Q1 2024 – Accreditation Procedures
• Q2 2025 – Publication of E-invoicing Legislation
• Q2 2026 – Phase 1 Implementation

Want to Know More About E-Invoicing in UAE?

You can also check out our full guide on e-invoicing in UAE. Or, if you want to talk to someone directly, just reach out. Our team will walk you through everything you need to know. Just email us at uae@flick.network.