UAE Invoicing Norms

1

Hello,

I wanted to get clarification on a few queries

  1. As per UAE FTA, any invoice raised in currency other than AED, there must be a converted AED amount also displayed. Also if amount in words can also be displayed.

  2. The balance payable amount to be removed from the invoice.

  3. Mandatory field of Place of Supply for compliance issues.

2

I suggest you research these issues more carefully. So far as direct comparison with UAE laws reveal, Manager meets all requirements. Note that there are many web sites showing samples and offering guidance that do not meet actual requirements of laws. For example, place of supply is not a field to be filled in. Place of supply is determined according to a fairly thorough table and is determined based on other information provided on a tax invoice.

3

True.
The government is very strict on Invoicing formats and comes for visits to check invoice and the penalty levied by govt for not invoicing as per Law is charged on the number of invoices generated.

For Example if May Month has 1000 Invoices, the penalty is 20 AED X 1000 Invoices = 20000 AED. That is the reason we insist on having additional fields for disclosure. This is a precaution with all UAE clients u have.

What I need to customize in Manager is :
THIS IS DIRECTLY FROM OFFICIAL TAX DEPT (I am not from IT Background and dont know coding. If you can help us with this 100% of our problems are resolved.Invoicing format is the only challenge we are facing) :

  • ‘Tax Invoice’ clearly displayed (Available)
  • Name, address and TRN of supplier (Available)
  • Name, address and TRN of recipient (Available)
  • Sequential Tax Invoice number, or a unique number which enables identification of the Tax Invoice and the order of the Tax Invoice in any sequence of invoices (Available)
  • Date of issuance (Available)
  • Date of supply (if different from date of issuance)(Optional)
  • Description of goods or services supplied (Available)
  • The unit price, quantity or volume, rate of tax and amount payable expressed in AED for each good or service (Need to ADD)
  • The amount of discount offered (Available)
  • Gross amount payable in AED where the invoice is in currency other than AED (Need to ADD)
  • Tax amount payable expressed in AED together with rate of exchange applied (Need to add)
1 Like
4

How can you show such a thing. If invoice is issued in USD, then USD amount is owed. AED amount is irrelevant because it keeps changing on daily basis based on USD:AED exchange rate.

In other words, by the time customer receives your USD invoice, AED amount will be out of date.

5

If AED is the currency, all these items are shown.

I’ll say the same thing to you I’ve recently said to other UAE users: If you think Manager does not comply with your law, provide a link to government documentation showing requirements that are not met. There are many web sites purporting to show UAE invoice formats and to list various requirements. It turns out most have little to do with the actual law, which is relatively straightforward and easy to understand.

I will also point out that considerable effort went into accommodating the new GCC-wide tax regime earlier this year. Most recent comments and suggestions seem to come from people who are just now becoming aware of tax requirements in their respective states, even though the new system has been in effect since January.

6

It is mandatory here. U can invoice it in USD and use the conversion rate… The government is very keen upon have the essence of Arabic n national currency on the invoice… I had similar doubts… but as it is not a democratic country no questions raised and follow the rules… U can have a look at the law if u don’t believe me… Hope u help out… We are book keepers and find u r app interesting… Or can I give u a few contents which u can help me coding with.

7

The below link is the linnk from Official Tax Website of UAE.

If you read the very first line of the law and it says Unofficial Translation tough downloaded from the official site( mof.gov.ae ). The reason is because the original law has been made in Arabic, Now you cannot debate on what you understand from the English Translated law with the one in Arabic as the Arab Countries do not consider english and want to protect their arabic culture. Thats the reason when any invoice is made other than AED, both amounts have to reflect on the invoice. We can show AED amount separately in a line item below.

Also please read Article No. 69 for your reference in the file below. Lot of US & UK Subsidiaries in dubai have a practice of invoicing in USD & Pounds, they also do the same.

These queries will keep arising with everyone who is using it in UAE. As there is not Income tax in UAE, one of the major source for government is fines & penalties which they will do with out considering your explanations to them and the management will have to resort to an other alternative which has inbuilt UAE Invoice Formats for Invoicing purpose and then account for it in Manager. (Instead if we can have a theme configured for manager or a code for UAE Users to paste it as a new theme).
Also, In some legal departments of UAE, official company documents printed in english are not accepted as it is mandatory to translate that document in Arabic and submit.

The effort put is undoubtedly usefull for accountants and book keepers but we really do not want to take chances on clients to have face penalties which is very severe i.e one visit penalty could be some times more than their annual profit and a few cases have also been reported in the news where the company had to be wound up. I know your questions are considerable as I am my self a Chartered Accountant, and we have no option when the government wants it in the manner they prescribe.

https://www.mof.gov.ae/en/lawsAndPolitics/govLaws/Documents/VAT%20Decree-Law%20No.%20(8)%20of%202017%20-%20English.pdf

8

The outdated amount will be a ForEx Loss/gain. Please refer my post below.

9

@Ankit_Jain, I have read the entire decree previously. In particular, Article 69 does not say tax invoices must be in both currencies. It says that, when supply is made in a foreign currency, then for purposes of the tax invoice, the amount must be converted into AED according to the official exchange rate on the date of supply. This means you can bill and collect money in any currency you like, but the official tax invoice must be stated in AED. Nothing prevents you from stating both on the invoice, but nothing requires it. Stating all tax invoices only in AED removes any doubt. If you desire, custom fields could be added for the convenience of customers, in which you convert amounts to other currencies and specify exchange rates used. But these would be for information only. The decision to accept payment in a foreign currency (which might no longer exactly match the amount in AED) would be one for a business to make, requiring write-offs or write-ons.

You should also review the Executive Regulation referred to in Article 65. The Executive Regulation is where detailed requirements for tax invoices are set forth. Again, the explicit requirement is to state the amounts in AED. (See Article 59.) Manager can meet these requirements.

This is not a coding forum, and I see no reason why any custom theme would be required.

1 Like
10

@Tut & @lubos thanks for your great work. I have read a lot of your posts in various topics but since this is my first post I am sharing my appreciation here.

UAE VAT invoices require VAT to be shown in AED irrespective of the currency the invoice is raised in. Additionally, the UAE Central Bank exchange rate is required to be shown for AED vs. the invoice currency. Here is the official requirement: Tax Invoices and further information on exchange rates: Exchange Rates

I have hardcoded 1 USD = 3.6725 AED in Manager (AED is actually pegged to the USD so doesn’t change). Is it possible to print this exchange rate on our invoices?

When billing in non-AED currency (e.g. USD), the VAT included in an invoice shows in the invoice currency not AED. VAT is posting to the Tax Liability account correctly (in AED), can we have Manager display the VAT in AED on the invoice?

Thanks.

11

Yes. Use a custom field. If the exchange rate remains fixed, the content of the field can be set in Form Defaults.

Not automatically. All amounts on invoices are in the currency of the customer or supplier (as applies). If you want to show equivalent tax amounts in AED, use another custom field.

12

Thanks @Tut. Pretty easy for USD (and other currencies pegged to the US$) as its pegged and doesn’t change. But a form default wont work with other currencies.

Is it possible to pull an element (field?) from an existing form and add it to the invoice? What I mean to say is: there is a field on the Inter-Account Transfer form which will be perfect for our invoices:

image
Is it possible to get this on the invoices? It could solve both issues… Thanks.

13

You only mentioned a USD exchange rate.

No, because no bank account is involved when you raise an invoice. Only the customer or supplier is involved, and they are in a single currency. Inter account transfers force equivalence between outflows and inflows. The listed exchange rate (when the two accounts are in different currencies) shows how that was done. No forced equivalence occurs for an invoice.