Electronic Invoicing In The United Arab Emirates
On January 1st of this year, the United Arab Emirates (UAE) implemented a 5% VAT (value added tax) on goods and services. This tax was implemented in an effort to wean the nation off of its reliance on foreign oil and to increase domestic revenue.
There isn't yet a necessity in the UAE for electronic invoicing or electronic VAT reporting. However, a legislation on electronic transactions was published by the Federal Tax Authority (FTA). Regulations pertaining to electronic accounting, storage, and validation processes, such as document authorization and signing, are introduced by Federal Law No. 1 of 2006 on Electronic Commerce and Transactions. The legal system recognizes the use of electronic records, documents, and signatures.
This regulation mandates that whenever electronic invoicing is required, invoices must only be created and distributed electronically, and an electronic signature must be used. These documents must also be stored electronically for ten years.
The exchange of electronic commercial papers is currently permitted, provided that the recipient agrees to receive them in the format that was chosen along with the issuer. They must be produced in accordance with the set guidelines and stored in the same format as when they were first given. To ensure the legitimacy and consistency of the documents, an electronic signature must be used.
The Federal Law of 2006 has the following objectives:
- To lay the foundations and obligations of mandatory electronic processes.
- Unify the procedure for the creation of electronic invoices and promote the development of technological infrastructures necessary to implement electronic processes.
- Facilitate the exchange of documents with public entities and business partners in a standardized and authenticated manner.
Together with the administrations in each country, EDICOM continuously tracks the advancement and evolution of the laws governing electronic invoicing. Stay up to date on any updates by subscribing to the newsletter.