All You Need to Know about Tax Invoice under VAT in UAE
03

Mar 2021

The government of the United Arab Emirates has implemented the Value Added Tax recently, which will help both corporates and the people of the country. In the long run, the United Arab Emirates will be benefitted and will be able to utilize a new source of revenue while effectively and efficiently removing its reliance from its oil and gas sector.

As Value Added Tax (VAT) is a recently introduced tax, it is understandable that the consumers do not have much knowledge about this tax.  There have been cases when businesses had collected VAT from the consumers when they were not authorized to do so. Also, there have been cases when even the companies are not clear on the proper applications of VAT and thus are not able to use it to the fullest.

To remedy this situation, you should always ask for a vat receipt or a Value Added Tax Invoice. Let’s understand all about Tax Invoice in the United Arab Emirates.

What is a Tax Invoice?

According to the Federal Law Number (8) of 2017 concerning the Value Added Tax (VAT Law), some necessary features are required in a Tax invoice. In case these requirements are not fulfilled, an administrative penalty may be issued.  The VAT Law in the United Arab Emirates states that if there is the presence of assessable supplies which surpass the cost of AED 10,000, in such case all the registrants must issue a tax Invoice.

Types of Tax Invoices

There are two different types of Tax Invoices, which are:

1.Simplified Tax invoice

A Simplified Tax Invoice provides very less amount of information and is issued to the clients who do not have to provide a VAT number. This Invoice is mostly used in various supermarkets and the retail industry.

The information which a Simplified Tax Invoice provides are given below:

  • The words "Tax Invoice" are written on the top of the Invoice.
  • The Name, Address and the Tax Registration Number (also known as TRN) of the person registering is mentioned in the Tax Invoice.
  • According to the Article Number (27) of the VAT Law, the date of the transfer of the goods which are transferred by a taxable person or a company should be mentioned in the Tax Invoice.
  • As per the same Article (27) of the Vat Law, a description of the goods or service or bot should be mentioned on the Tax Invoice.
  • The total amount charged as tax should be mentioned in the Tax Invoice.

2.Detailed Tax Invoice

  • The words "Tax Invoice" are written on the top of the Invoice.
  • The Name, Address and the Tax Registration Number of the person registering is mentioned in the Tax Invoice.
  • The place of the registration of the person is mentioned.
  • A Unique Tax Invoice Number is stated on the Tax Invoice which will allow the quick identification of the Invoice.
  • The Date of issue of the tax invoice and the Date of the Supply should be mentioned in the Tax Invoice (In case the supply date is different from the issue date).
  • The Detailed Description of the Goods or Service supplied should be present on the Tax Invoice.
  • The price of the goods or service, the total quantity which is supplied the total tax levied and the total amount to be paid should be mentioned in the Invoice.
  • Discounts (If any) should be mentioned.
  • The total amount which needs to be paid must be stated in AED.
  • If the tax invoice is presented in a place which has a different currency than Dirhams, the rate of exchange should be mentioned.

Article 59 of the VAT Regulations offer a format of the Tax Invoice for everyone to use. All the companies which are eligible to collect VAT must provide a tax invoice to its clients and should keep it in mind that all the requisites as mentioned above must be specified in the Tax Invoice or the company may have to face penalties and fines in the future.

In case you have a plan of setting up a company in UAE or are thinking of availing the financial services and are looking for a firm which will take care of all the business requirements of the company, then look no further. JAXA Chartered Accountants can help you in this matter. JAXA will take care of the financial aspects of your company and will also ensure that the company faces no hassle in the future.  To know more about the various services offered by Jaxa, Contact Us. We will be glad to provide you with assistance.