New Administrative Penalties for Electronic Invoicing Violations in the UAE

The Cabinet has reviewed relevant laws and decrees, deciding to implement a framework for Electronic Invoicing. Key definitions include "Electronic Invoice," "Electronic Credit Note," "Issuer," "Recipient," and "System Failure." The Decision addresses violations and related administrative penalties, applies specifically to the Electronic Invoicing System, and will be published in the Official Gazette, effective immediately thereafter.

The Cabinet, having reviewed the Constitution, Federal Law No. 1 of 1972 on the Competences of the Ministries and Powers of the Ministers and its amendments, Federal Decree-Law No. 13 of 2016 on the Establishment of the Federal Tax Authority and its amendments, Federal Decree-Law No. 8 of 2017 on Value Added Tax and its amendments, Federal Decree-Law No. 28 of 2022 on Tax Procedures and its amendments, Cabinet Decision No. 40 of 2017 on the Administrative Penalties for Violation of Tax Laws in the UAE and its amendments, and pursuant to the proposal of the Minister of Finance approved by the Cabinet, has decided as follows:

Article 1 – Definitions

The definitions in Federal Decree-Law No. 28 of 2022 shall apply to this Decision. In addition:

• Electronic Invoice: An invoice issued, transmitted, and received in a structured electronic format that enables automatic and electronic processing, in accordance with the Electronic Invoicing System.
• Electronic Credit Note: A credit note issued, transmitted, and received in a structured electronic format that enables automatic and electronic processing, in accordance with the Electronic Invoicing System.
• Issuer: Any Person obligated to issue, transmit, share, and exchange Electronic Invoices and Electronic Credit Notes through the Electronic Invoicing System.
• Recipient: Any Person who shall receive Electronic Invoices and Electronic Credit Notes through the Electronic Invoicing System.
• System Failure: Any technical malfunction, disruption, or unavailability of the Electronic Invoicing System that prevents the Issuer or Recipient from complying with their obligations under the legislation in force.

Article 2 – Scope of this Decision

• This Decision applies to violations of the legislation regulating the Electronic Invoicing System, in accordance with Federal Decree-Law No. 28 of 2022.
• This Decision does not apply to any Person who voluntarily issues, transmits, shares, exchanges, or reports Electronic Invoices and Electronic Credit Notes in accordance with decisions issued pursuant to Federal Decree-Law No. 28 of 2022.

Article 3 – Violations and Administrative Penalties

The administrative penalties listed in the table annexed to this Decision shall be imposed for violations related to the Electronic Invoicing System.

Article 4 – Publication and Entry into Force

This Decision shall be published in the Official Gazette and shall come into force on the day following its publication.