Choose E-Invoicing Provider By October

Tim (0:01)

This is the Morning Drive, it's Mira Business FM. And this morning, this is important, I think, the UAE e-invoicing deadline, what businesses must do before October the 30th. So with an annual revenue of 50 million dirhams or more, there is a good bit less than a month to appoint an accredited e-invoicing service provider. The October 30th deadline is approaching.

Mandatory implementation is set for January the 1st, next year, 2027 So what do you need to do to prepare? Could existing accounting systems be ready? Let's look at the new requirements and compliance steps. Sameer Ansari is back. He's a senior client accountant at Sovereign PPG, corporate services provider. He's with me, good to see you.

Sameer Ansari (0:50)

Thank you, Tim.

Tim (0:51)

So what is, let's start right at the beginning, what is the UAE's new e-invoicing system? How is it going to change, Sameer, the way that businesses issue and process invoices?

Sameer Ansari (1:04)

Well, the new e-invoicing system will change the invoicing dynamics of the UAE as they currently are. So currently the invoices are being issued manually, or PDF invoices are being raised and sent directly to the clients or the customers. But when the e-invoicing will be implemented, it will change and the FDA will be involved in the real time. Currently, they are not involved.

So what happens currently is companies are required to file quarterly VAT returns. And when they are filing the VAT returns, only then the FDA comes to know of this revenue and the VATable amount that they are due to receive or pay to the FDA.

After e-invoicing, what will happen is the FDA will get real-time data transmitted from both customers and suppliers, and it will be done in a structured way. So how the structure will work? FDA is working on a five corner model, which is called the Pepple Network Model. It is, you know, widely used internationally as well. So this model will work based on the five steps that will be followed to issue an invoice. So currently what is happening is I have a business and I have a customer. I raise a PDF invoice, I send them the PDF invoice, it's done. But from the day, the invoicing will be implemented, it will no longer be the case. So what you will need to do is you will first of all need to appoint an ASP, which is an accredited service provider. So there is a list issued by Ministry of Finance of the approved ASPs, which you can appoint and you must select them on your tax portal, whichever ASP you are choosing. So the first step is to appoint an ASP. The second step is to integrate your ASP with the system that you already have, or if your ASP have a system on their own, you can transfer from your current accounting software to their software for ease of access.

So once the FTA, once you have a point in the ASP, then obviously from 1st of January 2027, you are required to do invoicing through this platform. You cannot no longer send invoices directly to the customers. They must be sent invoices through this network. So what will happen, the data will be structured in a way that once you raise an invoice in your system, the invoice must contain 52 mandatory fields that are required by the FTA to be included in an invoice. The system will automatically check it. Once you raise an invoice, it will be sent to the ASP for, you know, to ensure that all the 52 fields, they will vet the invoice, that everything is digitally done.

Then the ASP is responsible to remit those details to the FTA in real time. The FTA will receive your invoice, and then what will happen is because you will enter the tax registration number of your customer or supplier, the FTA will have data to whom the invoice is directed. Then based on the database that they have, they will remit that invoice to the ASP of your customer.

That customer will then validate the data, and you will finally receive the invoice as a customer. So three parties are getting involved instead of the traditional two. So three more parties are getting involved. So one is the ASP of the business that is issuing the invoice, one is the FTA itself, and third is the ASP of your customer. So all these parties will be remitting these data in real time. What will happen is, FTA will have real time data of the transactions that are happening, and it will increase transparency. It will obviously reduce frauds and misreporting of the data. Once it's reported in the FTA system, you can no longer obviously be able to omit it or do something like that, that we are saying that there are practices in the market that the VAT is being misreported to the FTA.