Regulatory updates - United Arab Emirates

Updated application guide to document issuance exception under the VAT law

On December 5, 2025, the FTA published a new version of the VAT Administrative Exceptions Guide.

The guide establishes currently enforced procedures, allowing taxpayers to request exceptions from issuing documents under the requirements of Federal Decree Law No. 8 of 2017 on Value Added Tax. Taxpayers may request exceptions referring to:

• Issuance and details reflected on a Tax Invoice
• Issuance and details reflected on a Tax Credit Note
• Alternative evidence to prove the Export of Goods
• Extension of the period to export Goods

Conditions vary depending on the document type but include maintaining sufficient alternative records and providing reasonable justification or proof to the inability to meet the requirements. Taxpayers may consult the VAT Administrative Exceptions Guide for detailed conditions and the outlined application procedure in the EmaraTax portal.

FTA emphasizes that requests outside this scope will be rejected.

Changes to VAT obligations and rights

The provisions of Federal Decree-Law No. 8 of 2017 have been amended through Federal Decree-Laws no. 16 and 17 of 2025. Key changes taking effect on January 1, 2026, include:

• Reverse charge: Taxpayers will no longer be required to self-invoice for cross-border imports of goods and services made for business purposes. However, self-invoicing may still be required to support VAT recovery where supplier documentation is not available.
• Excess recoverable input tax: A five-year time limit is introduced for carrying forward and claiming excess recoverable input tax. After five years from the end of the tax period, tax credit can no longer be offset or claimed. Taxpayers with refunds having expired or expiring within one year from January 1, 2026, must request a refund before January 1, 2027.

The Cabinet Decision specifies violations subject to penalties, and the corresponding fines. According to the Decision, the following penalties will apply:

• Failure to implement the e-invoicing system or to appoint an Accredited Service Provider: 5,000 AED (approximately 1,175 EUR) for each month of delay or part thereof
• Failure by the issuer to issue and transmit an e-invoice or electronic credit note to the recipient through the e-invoicing system: 100 AED (approximately 23 EUR) per e-invoice, capped at 5,000 AED (approximately 1,175 EUR) per calendar month
• Failure by the issuer or recipient to notify the Federal Tax Authority of a system failure: 1,000 AED (approximately 235 EUR) for each day of delay or part thereof
• Failure by the issuer or recipient to notify the appointed Accredited Service Provider of updates to the data registered with the Authority: 1,000 AED (approximately 235 EUR) for each day of delay or part thereof

The penalties apply from the prescribed timelines of adherence to the e-invoicing obligations.

However, the penalties do not apply to entities who issue, transmit, share, exchange or report e-invoices and electronic credit notes voluntarily.

Scope

The Decisions, outline that the Electronic Invoicing System must be used by all entities conducting business in the UAE for all business-to-business (B2B) and business-to-government (B2G) transactions, with only a few exceptions. Businesses not within the scope may voluntarily comply.

In-scope businesses must send and receive their electronic invoices and credit notes through the system compliant with the required data fields, using their appointed accredited service provider (ASP).

Timeline

The roll-out will adhere to the following timelines:

• July 1, 2026: Pilot Program begins with selected taxpayers

Mandatory obligations then extend to large businesses with annual revenues equal to or exceeding AED 50,000,000 (approximately 11.59 million EUR):

• July, 31, 2026: Deadline to appoint an ASP
• January, 1, 2027: Mandatory implementation

For other businesses with annual revenue below AED 50,000,000 (approximately 11.59 million EUR), the following dates apply:

• March 31, 2027: Deadline to appoint an ASP
• July 1, 2027: Mandatory implementation

Lastly, the requirement extends to in-scope government entities:

• March 31, 2027: Deadline to appoint an ASP
• October 1, 2027: Mandatory implementation

Taxpayers in scope are advised to appoint an ASP ahead of their deadlines and familiarize themselves with the technical requirements.