One of the most common mistakes we still see among businesses in the UAE is the incorrect use of tax invoices. Some companies that are not VAT registered continue to issue invoices showing “VAT” or even charging VAT — which is both misleading and non-compliant.
Let’s clear the confusion.
When Should You Issue a Tax Invoice?
Under UAE VAT law (Federal Decree-Law No. 8 of 2017 on VAT) and its Executive Regulations, a Tax Invoice is required when:
- The business is registered for VAT with the Federal Tax Authority (FTA).
- A taxable supply of goods or services is made in the UAE.
- The value of the supply is more than AED 10,000 (simplified tax invoices are allowed below this threshold, usually in B2C cases).
Only VAT-registered businesses are legally allowed to issue a tax invoice with VAT shown.
What If You’re Not VAT Registered?
If your business is not VAT registered, you must not:
- Mention VAT or add 5% on your invoices.
- Use the words “Tax Invoice” on your document.
Instead, you should issue a normal commercial invoice without any VAT reference. Adding VAT when you are not registered is a violation and can lead to FTA penalties.
Key Contents of a Valid Tax Invoice
If you are VAT registered, a proper Tax Invoice must include:
- The words “Tax Invoice” clearly displayed.
- Name, address, and TRN (Tax Registration Number) of the supplier.
- Name, address, and TRN of the recipient (if registered).
- Invoice number and date of issue.
- Description of goods or services supplied.
- Total consideration payable, with VAT amount shown separately.
- Net amount (excluding VAT), VAT rate, and gross total.
Why It Matters
Issuing incorrect invoices creates risks such as:
- Penalties from the FTA for misrepresentation.
- Loss of trust with clients, who may not be able to claim input VAT if your invoice is invalid.
- Compliance exposure, especially during audits.
Clarity – Compliance – Confidence
At Finzoryx, we emphasise getting these basics right:
- Clarity on when to issue tax invoices versus normal invoices.
- Compliance with FTA invoicing requirements.
- Confidence that your records will stand up in case of audit.
📩 Reach out at connect@finzoryx.com or call 0503978121 if you want us to review your invoicing system and make sure you’re fully compliant.