Background

• Ministerial Decision No. 243 of 2025 on the Electronic Invoicing System (“Ministerial Decision No. 243”) establishes the framework for the implementation of the e-Invoicing system in the UAE. The scope of Ministerial Decision No. 243 applies to any person conducting a business in the UAE, with certain exclusions. Excluded transactions include:
  • Business transactions by government entities acting in a sovereign capacity.
  • International passenger transportation services by airlines via aircraft, where an electronic ticket is issued to passengers. An electronic ticket contains information and conditions of a contract related to the carriage of passengers.
  • Ancillary services provided directly to passengers by airlines (related to international passenger transportation), where an electronic miscellaneous document is issued. This document is per the International Air Transportation Association standards to facilitate the fulfillment of optional or ancillary services related to the carriage of passengers.
  • International transportation of goods by airlines, where an airway bill is issued, which confirms the receipt of goods and proves the contract of carriage. This exclusion applies only for 24 months from the effective date of the e-Invoicing system.
  • Financial services that are either exempt from VAT or subject to VAT at the zero rate, as specified in Article 42 of the UAE VAT Executive Regulation.
  • Any other business transactions as may be determined by the Minister.
• Ministerial Decision No. 243 also allows for voluntary participation in the e-Invoicing system if the business makes the excluded transactions listed above (or is an excluded person), with mandatory compliance to the e-Invoicing provisions except for administrative penalties.
• A main requirement is the appointment of Accredited Service Providers (ASPs), who are authorized to facilitate e-Invoicing services. Both issuers and recipients of e-invoices and credit notes must appoint such ASPs and notify them of any changes to the data registered with the Federal Tax Authority (FTA) within five business days of receiving confirmation of the amendment by the FTA.
• Ministerial Decision No. 244 of 2025 on the Implementation of the Electronic Invoicing System (“Ministerial Decision No. 244”) sets out the framework for the phased implementation of the e-Invoicing system in the UAE, building on the definitions and principles established in Ministerial Decision No. 243.
• Ministerial Decision No. 244 introduces the concept of a "Taxpayer Working Group" and a "Pilot Programme," under which selected participants, upon written agreement, will collaborate with the MoF and FTA to test the e-Invoicing system. The Pilot Programme is scheduled to commence on 1 July 2026.
• The scope of application covers all persons subject to the e-Invoicing system, those who voluntarily implement it, and any other persons as determined by the MoF. Voluntary implementation is permitted from 1 July 2026, provided that participants comply with all technical requirements set by the MoF and the FTA.
• A key feature of Ministerial Decision No. 244 is the mandatory phased implementation, which is structured as follows:
  • If annual revenue is equal to or exceeds AED 50,000,000, an ASP must be appointed by 31 July 2026 and the e-Invoicing system must be implemented by 1 January 2027.
  • If annual revenue is below AED 50,000,000, an ASP must be appointed by 31 March 2027 and the e-Invoicing system must be implemented by 1 July 2027.
  • Government entities are required to appoint an ASP by 31 March 2027 and the e-Invoicing system must be implemented by 1 October 2027.
  • After these phases, all remaining persons or government entities subject to the e-Invoicing system must comply with the requirements.
• Business-to-consumer ("B2C") transactions are excluded from the scope of mandatory implementation for now. Persons engaged exclusively in B2C transactions are not required to comply until a future date determined by the Minister.
• UAE VAT Executive Regulation (Cabinet Decision No. 52 of 2017 and its amendments) introduces amendments to Article 59 and Article 60, highlighting that e-Invoicing and e-credit notes may not apply under certain transactions. There still seems to be a potential shift towards a requirement for businesses to issue e-Invoices or capture information for all types of supplies, including exempt supplies, out-of-scope supplies, and wholly zero-rated supplies. This still needs to be closely monitored.

Key immediate next steps for businesses

• Businesses should start planning for the implementation of e-Invoicing, including potential upgrades to their invoicing systems and training of staff.
• Businesses with annual revenue equal to or exceeding AED 50,000,000 must appoint an ASP by 31 July 2026.
• The MoF has released the list of pre-approved e-Invoicing service providers, and this list is expected to be updated periodically to include newly approved ASPs.

To speak with us on any of the proposed changes to the UAE e-Invoicing system, or any tax matters, please contact one of the team members above.