Regulatory updates - United Arab Emirates

The guidelines confirm timelines, scope and obligations. Key clarifications include:

• Clarification on voluntary and mandatory implementation: Voluntary implementation is permitted before an entity's mandated go-live date. Mandatory implementation follows the phased roll-out starting with large entities on January 1, 2027. E-invoicing penalties apply from mandatory implementation dates, and not for voluntary adherence.
• Abroad archiving allowed, subject to conditions: Electronic Invoices, Credit Notes and the associated data may be stored outside the UAE, provided they remain accessible, reproducible, and verifiable by the FTA throughout the retention period.
• Administrative exceptions to Tax invoice issuance do not apply to e-invoicing: Federal Tax Authority (FTA) administrative exceptions already granted for VAT Tax Invoices/Credit Notes, will not apply to Electronic Invoices/Credit Notes, and new exceptions from issuance will not be granted to e-invoices.
• Grace period for VAT group transactions: Intra-group transactions remain in scope, but a 24‑month grace period from January 1, 2027 suspends e-invoicing obligations between members of the same VAT group. After the grace period, these transactions must comply.
• Buyers not yet onboarded: When issuing Tax Invoices to buyers not yet on e-invoicing, suppliers must issue regular Tax Invoices in addition to the electronic Tax Invoice and include the predefined endpoint 0235:9900000098 on the e-invoice.

Furthermore, the guidelines reiterate the broad scope of e-invoicing for both entities and transactions, including exempt and zero-rated supplies and transactions giving rise to commercial invoices, with limited exclusions (including financial services transactions, airline ticket sales and government entities acting in sovereign capacity).

In-scope entities, referring to any person conducting business in the UAE, whether or not established in the UAE and regardless of VAT registration status (unless specifically excluded), are advised to review the guidelines and begin readiness planning.

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.