Decision on Tax Invoices and Credit Notes in the UAE
Tax Invoices and Credit Notes are a significant part of the value added tax (“VAT”) system implemented by the Federal Tax Authority (“FTA”) in the UAE. Their importance can be recognized by the fact that a complete article (Article 59) was published in the Cabinet Decision No. 52 of 2017 on the Executive Regulations of the Federal Decree-Law No. 8 of 2017 on Value Added Tax, clearly specifying the conditions to be met when generating Tax Invoices and Credit Notes.
In the latest update, the FTA has published Decision No. 7 of 2019 on Tax Invoices and Credit Notes (“the Decision”), superseding the previous Decision No. 3 on Tax Invoices.
The following are the significant points of the Decision:
- Where a taxable person is required to issue Tax Invoices and Tax Credit Notes relating to different supplies, the person shall issue a single document that mentions ‘Tax Invoice/Tax Credit Note’. Hence different invoices are not supposed to be issued for various supplies.
- Where a supplier is supposed to generate a Tax Invoice in relation to a customer, the physical address of both the supplier and the recipient is not required to be mentioned on the Tax Invoice, if the respective mailing address of both parties is mentioned on the Tax Invoice/Tax Credit Note. Previously this provision was only applicable for the recipient of goods as per Decision No. 3 on Tax Invoices.
The Decision only relates to the content and format of the Tax Invoice or Credit Note and shall not impact any other requirements.
This latest Decision shall prove beneficial for suppliers and customers in the long term as they will not need to worry about the implications of penalties in case of an invalid invoice. This shall also help in claiming the input VAT for the suppliers aiding business enterprises, in general, to concentrate on the main business activities possibly increasing relative profitability.
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