UAE Launches Mandatory E-Invoicing System: What Businesses and Practitioners Need to Know

The UAE has officially rolled out its e-invoicing system. The country’s first unified digital invoicing framework, defines the legal, technical, and operational parameters for mandatory e-invoicing, positioning the UAE among global frontrunners in tax digitalization.

The United Arab Emirates (UAE) has officially announced its Electronic Invoicing System (e-invoicing system): the country’s first unified digital invoicing framework. Published under Ministerial Decisions No. 243 and 244 of 2025 (hereinafter, “Decision 243” and “Decision 244”), the initiative was jointly rolled out by the UAE Ministry of Finance (MoF) and the Federal Tax Authority (FTA) pursuant to Federal Decree-Law No. 8 of 2017 on Value Added Tax (“VAT Law”).

Under the new framework, all business-to-business (B2B) and business-to-government (B2G) transactions will be required to issue, transmit, and store invoices electronically through Accredited Service Providers (ASPs), licensed technology entities authorized by the MoF and FTA. Each transaction must be supported by an e-invoice, while credit notes will document any adjustments or cancellations.

The phased rollout, beginning in July 2026, allows large enterprises, small and medium-sized businesses (SMEs), as well as government entities to transition progressively, ensuring operational readiness and minimizing disruption.

Scope and applicability of the UAE’s new e-invoicing system

Scope of application

The  e-invoicing system applies initially to B2B and B2G transactions.

As stipulated under Decision 243, the system’s scope covers both domestic and foreign taxable persons operating in the country, ensuring that all entities engaged in taxable supplies under the VAT Law fall within the regime’s reach.

In its first implementation phase, the e-invoicing system excludes business-to-consumer (B2C) transactions, which will be addressed in a subsequent ministerial decision. This phased inclusion reflects the MoF’s intention to prioritize the digitalization of higher-volume and higher-risk transaction flows, specifically those between registered businesses and government entities, before expanding the framework to retail and consumer-level activities.

For all in-scope transactions, the framework establishes a uniform set of obligations. Both issuers and recipients are required to issue, receive, and store invoices electronically through ASPs approved by the MoF and FTA. Each e-invoice must adhere to the structured data format prescribed in the Ministry’s technical specifications, referencing the OpenPeppol interoperability standard to ensure cross-platform compatibility and secure data exchange.

Key exclusions

At the same time, the scope of application now reflects key exemptions and transitional provisions, including:

• Government entities acting in sovereign capacity, where transactions are not conducted in competition with the private sector;
• International passenger air transport supported by electronic tickets, as well as ancillary passenger services supported by electronic miscellaneous documents (EMDs);
• International goods transport supported by an air waybill, which is exempt from e-invoicing requirements for a period of 24 months after launch; and
• VAT-exempt or zero-rated financial services, including specific transactions in the banking and insurance sectors, as defined under existing VAT legislation.

These exclusions are consistent with the MoF’s goal of balancing regulatory compliance and administrative feasibility during the early stages of implementation. They also align with practices adopted in other jurisdictions that have introduced similar digital invoicing frameworks, where exempt sectors are gradually onboarded as technical and procedural standards mature.

ASPs definition and requirements

Under the UAE’s e-invoicing system, the role of ASPs is central to ensuring the secure and compliant exchange of electronic invoices between taxpayers and the authorities. Defined under Decision 243, ASPs are licensed technology intermediaries authorized by the UAE MoF and the FTA to facilitate the issuance, transmission, receipt, and storage of e-invoices and related documents in accordance with the system’s technical and legal specifications.

Both invoice issuers and recipients are required to appoint an ASP, through which all e-invoicing operations must be conducted. Each ASP acts as a secure interface between a taxpayer’s internal ERP or accounting systems and the national e-invoicing network, ensuring that every invoice or credit note is formatted, validated, and transmitted in line with the e-invoicing system’s structured data and interoperability protocols.

Accreditation and eligibility

Each ASP acts as a trusted conduit between the taxpayer’s internal accounting or ERP systems and the national e-invoicing system, ensuring that every transaction is validated, formatted, and stored in compliance with MoF and FTA requirements.

To qualify for accreditation, service providers must meet a set of stringent technical and operational criteria. According to the Ministry’s guidelines, ASPs must:

• Obtain and maintain active OpenPeppol certification, having successfully completed conformance and interoperability testing in accordance with Peppol technical standards;
• Provide documented evidence of at least two years of operational experience in managing and operating an electronic invoicing system.
• Hold a valid UAE trade license and demonstrate adequate paid-up capital to support service continuity and scalability.
• Maintain ISO/IEC 27001–certified data security frameworks, safeguarding the confidentiality and integrity of taxpayer information;
• Ensure data localization, with all invoices, credit notes, and related records stored within the UAE in line with the Tax Procedures Law;
• Offer high system uptime, real-time data synchronization, and encrypted communication channels to prevent unauthorized access or data loss.

Providers must also undergo FTA-administered quality assurance tests prior to approval, including pre-accreditation trials to verify the system’s ability to handle tax data accurately, maintain service continuity, and meet data localization obligations under the Tax Procedures Law.

Peppol certification and security controls

The UAE’s e-invoicing system relies on the OpenPeppol framework, enabling interoperability across different software environments and ensuring secure cross-border data exchange.

Peppol’s layered security model includes encryption, digital signatures, and multi-factor authentication, which together create a trusted environment for the transmission of tax and accounting data.

According to Reuters, “these controls are handled by the ASPs, which means businesses benefit from high levels of security and compliance without having to build it all in-house”.

Choosing an ASP

The MoF has released an initial list of pre-approved ASPs, which will be periodically updated to include newly accredited providers. This dynamic registry allows businesses to select service providers best suited to their operational scale and technical needs, while ensuring that all selected partners remain fully compliant with government standards.

The time required to implement ASP solutions varies depending on a company’s internal systems and data complexity. Businesses should engage early with accredited or globally certified providers to minimize transition risks, ensure timely compliance with e-invoicing system requirements, and build scalable, future-ready invoicing infrastructure.

Implementation timeline

The implementation of the new requirements will follow a phased approach, targeting different categories of taxpayers and government entities. Key milestones are outlined below:

Compliance requirements

Under the UAE’s national e-invoicing system, businesses and in-scope government entities must adhere to the following compliance requirements:

Mandatory issuance and transmission through ASPs: All invoices and credit notes must be issued and transmitted via an ASP within 14 days of the transaction date. Both issuers and recipients are required to appoint an ASP to process all electronic documents.

Structured electronic format: Invoices and credit notes must follow the prescribed XML format with mandatory data fields defined by the MoF.

Local storage obligations: All invoices, credit notes, and related data must be stored locally within the UAE, in accordance with the Tax Procedures Law, to facilitate audit readiness and regulatory compliance.

Cross-border interoperability: The system supports cross-border electronic invoicing through the OpenPeppol technical framework, aligning the UAE with international best practices for secure and standardized data exchange.

Adherence to these compliance standards is critical for businesses to avoid penalties, ensure smooth operations, and maintain accurate and verifiable tax documentation. Early planning, ASP appointment, and system alignment with OpenPeppol standards are key steps for successful implementation.

Implications for UAE businesses and practitioners

E-invoicing introduces both operational challenges and strategic opportunities for UAE businesses. Effective compliance begins with understanding the phased implementation based on revenue thresholds, ensuring that ERP systems and internal workflows are fully prepared, and appointing an Authorized Service Provider (ASP) where necessary.

Businesses should revisit contracts across supply chains, procurement, and service arrangements should to clearly allocate e-invoicing responsibilities, avoiding ambiguities that could lead to disputes or reporting errors. Beyond technical readiness, governance frameworks must be strengthened: internal policies, audit controls, and capacity building for finance teams are critical to maintaining compliance and supporting smooth operational integration.

For advisory professionals, this transition creates opportunities to provide value-added guidance, from system validation and integration support to dispute prevention and compliance assurance.

(US$1 = AED 3.67)

• Previous Article UAE’s New Media Law Overview: What Media Companies and Influencers Need to Know
• Next Article