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      On 29 September, the UAE Ministry of Finance (MoF) issued Ministerial Decision No. 243 of 2025 on the Electronic Invoicing System (MD No. 243) and Ministerial Decision No. 244 of 2025 on the Implementation of the Electronic Invoicing System (MD No. 244), together referred to as the ‘Ministerial Decisions’, for the purpose of establishing the scope of application of the E-Invoicing System and the obligations of the persons subject to it. The issuance of the Ministerial Decisions follows recent amendments to the Tax Procedures Legislation and VAT Legislation, modifying key provisions for the implementation of the E-Invoicing System in UAE.

      The Ministerial Decisions will come into effect on the date of their publication in the Official Gazette, and it is expected that additional Ministerial Decisions will be published by the MoF to support the full implementation of the E-Invoicing System.

      The MoF has also issued a preliminary list of the Pre-Approved E-Invoicing Accredited Service Providers (ASPs), which will be updated periodically to include newly approved ASPs. Both issuers and recipients of electronic invoices and electronic credit notes must appoint an ASP to implement the E-Invoicing System.

      The E-Invoicing System will be implemented in a pilot program of taxpayer working groups, and on a mandatory basis in three main phases. Businesses may also opt in for early implementation of the E-Invoicing System on a voluntary basis.

      Businesses are encouraged to review these major updates, perform an E-Invoicing readiness assessment and conduct a full review of their governance structures to ensure successful implementation across all business functions and a smooth transition.

      Summary of the key provisions of the Ministerial Decisions

      Scope of application
      • It has been confirmed that every business in the UAE conducting businesses-to-business (B2B) and/or business-to-government (B2G) transactions is included in the scope of application of the E-Invoicing System. Any business transactions conducted in full or in part by a person in the course of its business fall within the scope of implementation.
      • As an exception, business-to-consumer (B2C) transactions are excluded from the E-Invoicing System. In addition, other specific business transactions (defined as any transaction conducted in full or in part by a person in the course of its business) are excluded from the scope of application of the E-Invoicing System (please see below).

      Businesses included in the exclusion list should also consider their E-Invoicing requirements and are recommended to perform an E-Invoicing readiness assessment to ensure a smooth transition.

      Exclusion list
      • It has been clarified in MD No. 243 that the following business transactions are excluded from the scope of the E-Invoicing System:
        • Any business transactions conducted by government entities in a sovereign capacity, which are not in competition with the private sector.
        • International passenger transportation services provided by an airline via an aircraft, where an electronic ticket is issued to passengers, and any services provided directly to passengers by an airline that are ancillary to the principal services (where an electronic miscellaneous document is issued for such services).
        • International goods transportation services provided by an airline, where an airway bill is issued for such services (applicable for 24 months from the date the E-Invoicing System becomes effective).
        • Financial services that are exempt from VAT or subject to VAT at zero rate.

      Businesses performing the above business transactions must carefully assess their E-Invoicing obligations considering all of their business transactions as some parts may still be subject to the requirements.

      • It has been clarified that businesses included in the exclusion list may voluntarily participate in the E-Invoicing System.

      The list of exclusions from/inclusions in the E-Invoicing System may be extended as determined by the MoF. Additional information on excluded businesses may be further extended and clarified by the MoF. 

      Special considerations
      • It has been clarified that agents acting on behalf of principals, and recipients issuing tax documents on behalf of issuers under self-billing arrangements, should issue electronic invoices or electronic credit notes under the E-Invoicing System.
      In general, electronic invoices and electronic credit notes should be issued within the timelines prescribed by the VAT legislations and according to the date of supply rules for VAT purposes.

       

      Key timelines for the implementation of the E-Invoicing System

      ParticularCriteriaTimeline

      Pilot program
      • Certain businesses shall be included in the taxpayer working group upon its written agreement to participate in the pilot program.
      • The business shall comply with all the Decisions regarding E-Invoicing System.
      • Commence on 1 July 2026.
      Mandatory implementation
      Phase 1
      • The business must be subject to the E-Invoicing System.
      • The revenue (i.e. the gross income earned by a person during the most recent accounting period) shall be equal to or exceeds AED 50,000,000.
      • Appointment of an ASP by 31 July 2026.
      • Implementation of the E-Invoicing System by 1 January 2027.

      Phase 2
      • The business must be subject to the E-Invoicing System.
      • The revenue shall be less than AED 50,000,000.
      • Appointment of an ASP by 31 March 2027.
      • Implementation of the E-Invoicing System by 1 July 2027.
      Phase 3
      • The business shall be a government entity.
      • Appointment of an ASP by 31 March 2027.
      • Implementation of the E-Invoicing System by 1 October 2027.
      Voluntary implementation
      • The business shall comply with all the Decisions regarding E-Invoicing System.
      • Implementation from 1 July 2026.

      KPMG has a team of experienced tax specialists who can help you assess your current tax position, advise on the appropriate tax treatment, prepare clarification requests, and represent you in front of the FTA as registered tax agents.

      If you have any questions or would like to discuss your specific circumstances to determine the way forward, please get in touch with your usual KPMG contact or any of the tax professionals below.

      Contact us

      Keith Donegan
      Partner, Indirect Tax
      Email

      Julie Lere-Pland
      Principal, Indirect Tax
      Email

      Luis Alonso
      Director, Indirect Tax
      Email

      Keerti Ujwal
      Director, Indirect Tax
      Email