UAE: Implementation of mandatory e-invoicing from July 2026

The Ministry of Finance of the United Arab Emirates (UAE) posted on its website a plan to implement an electronic invoicing (e-invoicing) mandate that would apply to business-to-business (B2B) and business-to-government (B2G) transactions, while business-to-consumer (B2C) transactions will, for now, be considered out of scope. The e-invoicing system is set to be deployed using the Open Peppol network, functioning as a decentralized continuous transaction control and exchange five corners model.

To support the mentioned plan, the UAE enacted Decree-Law 16-2024, which amends the value added tax (VAT) law to include the general concept of e-invoicing, the Electronic Invoicing System, the Tax Reporting Mechanism, and the system to be used to store invoices once they are issued electronically. The decree also establishes that the specific provisions related to the technical specifications, schema, conditions, and procedures for issuing invoices will be defined in another regulation that will be drafted before the end of 2024 and enacted by the second quarter of 2025. 

Once the mandate is implemented, both issuers and recipients of the invoices will need to communicate their invoices and receipt acknowledgments via an access point of the Open Peppol network. The issuer's e-invoicing solution provider, who will also report such invoices to the Ministry of Finance and the Federal Tax Authority, will be responsible for validating the invoices. Only accredited solution providers will be permitted to send validated invoices to the Federal Tax Authority.

The implementation plan will occur in three stages:

• The first stage, scheduled for the last quarter of 2024, includes accrediting service providers of e-invoicing solutions
• The second stage, expected to be completed by the second quarter of 2025, involves updating local legislation to mandate the use of e-invoices
• The third stage covers the system's launch, requiring taxpayers to comply with the mandate and tax authorities to process and validate the issued invoices. This stage is planned to start in July 2026

The Ministry of Finance has indicated that the purposes of the mandate are, among others, to enhance the digitalization of the UAE and its fiscal ecosystem, improve efficiency both in the public and private sectors, and minimize VAT fraud.

Read an October 2024 report prepared by the KPMG member firm in the UAE

For further information, contact a KPMG tax professional:

Kathya Capote Peimbert | kcapotepeimbert@kpmg.com  

Philippe Stephanny | philippestephanny@kpmg.com  

Ramon Frias | ramonfrias@kpmg.com