PUBLIC CLARIFICATION ON TAX INVOICES
The requirements and the circumstances in which a tax invoice must be issued have been specified under article 59 of the Cabinet Decision No 52 of 2017 on the Executive Regulations of the Federal Decree Law No. 8 of 2017 on the Value Added Tax. The Federal Tax Authority has issued a public clarification on tax invoice called as VATP006 in order to provide clarification sought by the businesses over the application of the requirements outlined in Article 59.
REQUIREMENTS FOR ISSUING A TAX INVOICE
As per Article (65) of Federal Decree Law No. (8) of 2017 on Value Added Tax (“the Decree Law”) any VAT registered businesses making a taxable supply are required to issue an original tax invoice and deliver it to the recipient of the supply. This however applies without any exception and is subject to VAT @ 5%. Thus in the event of a taxable supply, a tax invoice is to be issued and delivered to the recipient.
CIRCUMSTANCES IN WHICH A SIMPLIFIED TAX INVOICE CAN BE ISSUED RATHER THAN A FULL TAX INVOICE
Article 59(5) of the Executive Regulation allows a taxable person to issue a simplified tax invoice rather than a full tax invoice in the following cases :
- Where the recipient of goods or services is not registered for VAT
- Where the recipient of goods or services is registered for VAT and the consideration for supply is AED 10,000 or less.
However the requirement to issue and deliver the tax invoice to the recipient does not affect the ability to issue a simplified tax invoice. Therefore it is mandatory to issue a tax invoice in respect of the supply where a standard rated supply is made.
LINE OF ITEMS THAT ARE TO BE SHOWN AT THE GROSS VALUE OF A SIMPLIFIED INVOICE
The required contents of a simplified tax invoice as per article 59(2) of the Executive Regulations are as follows :
- “Tax invoice” must be clearly displayed on the invoice
- The name, address and tax regulation number of the supplier, the date of issuing the tax invoice, description of the goods or services supplied and he total consideration and the tax amount charged must be mentioned on the invoice
LINE OF ITEMS THAT ARE TO BE SHOWN AT THE NET VALUE UNDER FULL TAX INVOICES
A full tax invoice includes several line items and has the net amount payable ( excluding the tax) as well as the tax due. However, the unit price, quantity or volume supplied, rate of tax and the amount payable that has been expressed in AED must be mentioned at the net value under full tax invoices.
INFORMATION TO BE SHOWN ON THE TAX INVOICE ISSUED IN FOREIGN COUNTRIES
The tax invoice that has been issued in foreign countries should contain :
the tax amount payable expressed in AED; and
the exchange rate applied (as per the exchange rates published by the UAE Central Bank on the date of supply)
Most of the businesses are however failing to issue a valid tax invoice for VAT purposes as they do not display the tax value in AED.
ROUNDING OFF OF TAX INVOICE VALUES
By applying mathematical logic, the tax value that has been stated on the tax invoice should be rounded to nearest whole fils ( i.e to 2 decimal places ) .