VAT Invoice in UAE & Its Importance: A (VAT) Value Added Tax invoice has to comply with the Federal Tax Authority UAE’s rules and contain a charge of the VAT that’s the correct amount. For all business entities registered in UAE for VAT, there’s a ton of information available online to ensure VAT invoices are adequately presented and formatted. Although there are FTA guidelines available that you can check and utilize as reminders, there may be specific VAT invoicing points that you miss.
In this article, Farahat & Co. provided you with a summary of all matters about VAT invoices, including why there are necessary.
What are VAT invoices?
VAT invoices are documents that are issued by VAT-registered business entities in the UAE, and they indicate that taxable supplies have been made, as well as the fact that VAT charges were added on the goods’ or supplies’ value.
Why are VAT invoices crucial?
A VAT invoice in UAE is necessary as it serves a lot of purposes, including the following:
- As a legal notice for the supplier and buyer that there was a VAT charge made;
- As a legal notice for the transaction of the business and another business, both of which are VAT registered businesses, as well as for how much VAT was charged;
- As the first proof or evidence which provides support to the recipient or registrant’s claim for an input tax deduction;
- As a crosscheck reference.
Take Note: A business that supplies goods and services finds VAT invoices as necessary, but so do people with whom the company is transacting. A VAT-registered business has to make sure that they can get a VAT invoice upon making purchases from other VAT-registered stores. A VAT-registered business in UAE can claim tax that’s charged for products or services for the market; however, this can only be done if VAT invoices are available.– Farahat & Co.
Do I have the duty to provide VAT invoices to customers?
A VAT-registered business in UAE has the legal requirements of issuing VAT invoices for every single taxable supply that is made to a VAT-registered business. A VAT invoice has to have a duplicate—an original document to be provided to the recipient. The invoice’s copy has to be retained and put in storage by the supplier of the items or services.
Is it illegal if I don’t supply a VAT invoice?
VAT Invoice in UAE: It’s considered in the United Arab Emirates as a serious offense if a business that is registered for VAT in UAE does not issue an invoice that contains the amount of VAT that is being charged concerning the supply of products or services. It is also illegal to hold business as authorized in the charging tax if it has not undergone VAT registration in UAE.
It’s also considered an offense if a VAT-registered business doesn’t issue VAT invoices when supplies or transactions have been made onto other VAT-registered companies and that recipients had made requests to supply VAT invoices.
How should I treat several different types of products and services that are on one invoice?
VAT Invoice in UAE: If VAT invoices include supplies that are considered as zero-rated in UAE, amounts that are of the standard VAT rate, as well as supplies considered as exempt from VAT in UAE. The invoice has to clearly state all items which are eligible for VAT, the tax rate that’s currently at five percent, as well as the amount of tax that has been charged. There can be special codes to use in identifying every category.
Is it possible to reuse a VAT invoice number?
VAT invoices in the UAE have to be sequentially numbered. This means that every invoice has to contain a unique reference number. If you write off or cancel a specific VAT invoice, then don’t ever reuse the name as it is already written off or canceled as an invoice. The invoice that was discarded has to remain in the records of the business to provide the FTA with sufficient evidence of the cancellation during VAT inspection.
What are the details that have to be on a UAE VAT invoice?
VAT Invoice in UAE: All details that have to be included on a UAE VAT invoice are as follows: the words or terms,
- VAT / TAX INVOICE;
- The name of the supplier
- Address of the supplier
- Tax Identification Number of the supplier
- Serial number or invoice identification number
- TIN of the recipient
- Name of the recipient
- Address of the recipient
- Date of the invoice
- Time of supply
- Detail if the amount was concluded
- Feature if payment was made before issuance of the VAT invoice
- Volume or quantity of supply
- Unique price of supply
- Description of products or services
- The value of service
- The item that is zero-rated or exempt, amount and rate of discount that is offered
- the VAT rate.
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Farahat & Co.
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