Tax Invoice is a written or electronic archive in which the taxable person collects complete information of taxable supplies made in a financial year. The Federal Law Number (8) of 2017 regarding the Value Added Tax (the VAT Law) establishes the necessary elements required for a Tax Invoice and the Executive Regulation Number 52 of 2017 concerning regulations on VAT (the VAT Regulation).
It is important that all taxable activities issued under the VAT administration cover these conditions. If a Tax Invoice generated don’t fit the required conditions, it would expedite an Administrative Penalty. Farther, organizations should accept measures to guarantee that Tax Invoices issued under VAT are exact and absolute.
As per the VAT law in UAE, a Tax Invoice is to be generated by all registrants for decidable supplies to other registrants, where the provisions exceed AED 10,000 (UAE Dirhams ten thousand).
There exist two types of tax invoices; a detailed VAT invoice and simplified VAT invoice. Coming to the simplified VAT invoice, it is for supplies less than the specified amount. It is generated when the clients are retail purchasers and not require to provide a VAT number. This kind of receipt is for supermarkets and retail industry.
Detailed VAT invoice is meant for supply more than the predestined sum. This kind of revenue is for wholesalers and merchants who manage in higher amounts.
1) A Simplified Tax Invoice Contains The Following Details:
- “Tax Invoice” necessarily offered on the invoice.
- It consists of Name, Tax Registration Number (TRN), and Address of the Registrant.
- According to the Article (25) of the VAT law, the date should be present on the tax invoice concerning the goods on which the company or the taxable person transfers the products.
- According to the Article (27) of the VAT law, an explanation of the Goods or Services supplied should be present on the tax invoice.
- It contains detailing of the total Tax amount charged.
2) A Detailed Tax Invoice Contains The Following Details:
- The words ‘Tax Invoice’ apparently offered on the invoice.
- The name, TRN, and address of the recipient.
- The name, TRN, and address of the Recipient where he is a Registrant.
- A unique Tax Invoice number showing identification of the Tax Invoice and the order of the tax Invoice in any systems of invoices should be shown on the invoice.
- The date on which the Tax Invoice is issued.
- Mentioning of the date of supply in case it is different from the date of the Tax Invoice which is issued by the company.
- A detail of the Goods or Services supplied.
- The unit price of goods or services, Tax rate, the supplied quantity, and the amount payable articulated in AED.
- The amount of any discount if it is applicable.
- The gross amount payable displayed in AED.
- The Tax sum payable displayed in AED together with the rate of exchange employed where the currency is diverse from the UAE Dirhams.
- Article 59 of the VAT Regulations gives a total format of the Tax Invoice. The supplier can plan its tax invoice and organize as per the requirements, yet needs to explain that the tax invoice covers all the data required as mentioned above.
Tax Invoice and Vat Bill Format UAE
A sample format of a Tax Invoice is available. The compulsory information is required to fill in a Tax Invoice. It is necessary for the recipient to pay tax in relation to Tax Invoice regarding a supply. It is also vital that the recipient should answer for a tax invoice.The Tax Invoice is covered under Article 48 of the VAT Law.
Many businesses in UAE, excluding retail businesses, would be working on supplies for which Tax Invoice is to be generated. As per the compulsory information required in any Tax Invoice issued by registrants has been determined in the VAT law, it is also important to consider that all invoices generated under the VAT regime follow these prerequisites. If Tax Invoices generated do not consist the important details, it could create an Administrative Penalty.
So, it would be helpful for all businesses to operate on a software which would automatically collect the information necessary in a Tax Invoice, inform the user if any compulsory details are not provided in the Tax Invoice, issue the Tax Invoice soon and amazingly, keep updated regarding all the information that is necessary to be provided in a Tax Invoice. Securing that Tax Invoices are generated properly by suppliers, it is vital for the recipient of the supply as well.
The Tax Invoice is taken as the base on which the recipient can request input tax deduction on the supply. Therefore, businesses require being aware of the Tax Invoices issued under VAT as they are precise and complete.