Full TAX Invoice for UAE

#1

hi @lubos

The requirement for a full TAX invoice for orders above 10K is now mandatory and many clients are insisting on the same. The existing invoice does not have there columns. Please confirm if this is something that will be implemented soon or should I look for an alternative system. Many have requested and @Tut have tried explaining it but the requirement is still not met. The full or detailed invoice must contain the below fields when printed. I have attached an image of an invoce as per the law.

VAT
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#2

It would help your case if you could cite a directive from your government which actually states which specific values are required to be simultaneously shown on the printed document.

#3

The requirement for full tax invoices (rather than simplified ones) for amounts above 10,000 AED has been mandatory since implementation of the VAT scheme. That is not something just now becoming mandatory. So clients are correct to demand full tax invoices. Manager is fully compliant with legal requirements in the UAE for full tax invoices if you specify tax-exclusive pricing and use a custom title of Tax Invoice (or equivalent in Arabic).

The image you have included is not from either the Federal Decree-Law No. (8) or the Executive Regulations implementing it. Nor are the columns shown required by the Decree-Law or Executive Regulations.

UAE’s Federal Tax Authority issued clarification about this in VATP006.

#4

Hi Tut,

For the above requirement, as per attachment you have mantioned, Tax Invoice should show Tax % and Tax amount of each line item. In current Invoice, there is no columns showing Tax % and Tax amount of each line item. Only with the final Invoice value, Total Tax is added. Please clarify if I am wrong.

Screen Shot 2020-09-21 at 10.06.33

#5

The “tax due” here refers to the Tax% or code as explained by the preceding paragraphs:

"One of the requirements of Article 59 of the Executive Regulations is for a full tax invoice to show the following information for each line item:

  • the unit price;
  • the quantity or volume supplied;
  • the rate of tax; and
  • the amount payable expressed in AED."

The enumerated list has 4 requirements only and none of them is the tax amount.

#6

I don’t think Tax due refers to Tax %, as in the same para it mentions:

As a full tax invoice includes several line items, each
shall have the net amount payable (excluding the
tax) as well as the tax due.

#7

@rajbhansali, where did your screen shot come from? Provide a link to the document. Unless it modified your decree-lee or the executive regulations, it has no legal force.

#8

Screenshot is from the same link that you shared on July 26th in above messages: Page 5

UAE’s Federal Tax Authority issued clarification about this in VATP006

#9

@rajbhansali, I agree with @Ealfardan. Article 59 is clear: only the tax rate is required for a line item on a full tax invoice. VATP006 confirmed this by reproducing the list of four required elements. The sentence you showed is in the same subsection of VATP006, titled “Full tax invoices: Line items to be shown at the net value.” It is very unlikely the FTA meant to contradict itself while discussing the same topic. A more reasonable interpretation is that FTA was reinforcing the point that invoices need to only show amounts net of tax. In fact, the final sentence in the paragraph states, “… full tax invoice does not need to include gross amounts (i.e. inclusive of tax) for each line item, as the total gross amount payable for the invoice shall be stated.” Why would FTA want you to include the tax amount for every line item if they do not want the gross amount for each line item?

If FTA wanted tax amounts, they would have stated “tax amount” or “tax amount due” rather than “tax due.” I agree the writing could have been more precise. While I do not speak Arabic, my attempts at translation from the original Arabic show similar problems. The original text seems to list the same requirement for “tax rate” when quoting Article 59. But it introduces language that apparently translates as “tax value” where VATP006’s English translation uses “tax due.” Neither, however, uses “tax amount.” Yet everywhere else, “amount” is used when referring to actual monetary quantities.

#10

Noted Tut, all I can say is that if all the registered Tax agents are saying that the VAT amount needs to be shown in the Invoice, there must be some genuine reason behind that. Please do rethink about giving this as an option.

#11

One more points, if for all line items we are using same Tax code, Tax code is not shown in all line items. It just comes at final total. Please let me know how to show Tax code in all line items.

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#12

@rajbhansali, the common assumption in accounting is that when only one parameter is shown on an invoice, it applies to the entire invoice. So your DXB VAT 5% tax rate is presumed to apply to every line item. This is the same as your designation of AED for the Sub-total applying to all line items.

#13

But Tut, the UAE FTA team is new and they might not agree to common assumption when their law clearly states that Tax Due should be shown in each line item. This Tax Due, as per the above discussion, is either the Tax Amount for each line item or Tax rate.

As a full tax invoice includes several line items, each
shall have the net amount payable (excluding the
tax) as well as the tax due .

#14

@rajbhansali, I understand your point about inexperience. But that is an issue to take up with FTA. Meanwhile, this topic is merely repeating discussions that have already taken place in other forum topics. I should have transferred your question to one of them when you first posted it.

#15

VATP006 is just a clarification for Cabinet Decision 52 of the year 2017 on Federal Decree Law #8 of 2017. Article 59, item 1.h explicitly lists the line requirements for full tax invoice as follows:

"For each Good or Service, the unit price, the quantity or volume supplied, the rate of Tax and the amount payable expressed in AED. "

As explained earlier, the clarification VATP006 also enumerates the exact list of four items, however, uses a vague term (“tax due”) to refer to Tax Rate or Code which adds to the confusion. However, no where in VATP006 does it state that “tax amount” is required per line.

As much as I want to agree with “All Registered Tax Agents” but they are clearly wrong. Now I am not a UAE Tax Registered Agent, but I do have UAE clients, none of them states the VAT amount in the lines and none of them received a penalty or a fine. We had some debates with an FTA officer but that’s it.

This however, is a legitimate claim. I have to side with @rajbhansali on this one. @Tut, please consider this in ideas.

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#16

This has been raised to the developer many times. It has been partially addressed by a recent change to tax-exclusive receipts and payments. But it has not made its way to invoices yet.

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