Due to a rise in queries related to contents of UAE VAT Tax Invoice by the business owners, UAE Federal Tax Authority recently issued VAT Public Clarification – Tax Invoices to clarify the contents as well as guidelines for issuing a simplified or full tax invoice.
Businesses must comply with the rules of tax invoice against the taxable supply made. Thus, this clarification has a great significance as complying with rules will help businesses to claim Input VAT.
VAT Public Clarification – Tax Invoices VATP006 consists clarifies when a tax invoice shall be issued and what details it should include.
In simple terms, this public clarification clarifies rules for issuance and contents of Tax invoice under Article 59 of Executive Regulations related to Contents of Tax Invoice.
VAT Public Clarification – Tax Invoices (VATP006)
This clarification covers 4 main points:
- Contents and Rules for Detailed Tax Invoice.
- Contents and Rules For Simplified Tax Invoice.
- Usage of Exchange Rates for Foreign Currency Invoices.
- Rounding off the Invoice to nearest Fils.
We have tried to simplify the Clarification for our readers by describing the main points out of the issued VAT Clarification on the given subject.
Let’s understand each point as clarified by FTA.
1. Contents & Rules of Detailed Tax Invoice
- Line items must be shown on the Tax Invoice.
- Each line item must vat tax value as well as the net value.
- Not mandatory to show the gross value for each line.
- Gross Payable Amount must be shown on the Tax Invoice.
- It is mandatory to issue and deliver/give a Tax Invoice to the customer in case of every taxable supply.
2. Contents and Rules For Simplified Tax Invoice
- If the supply is below AED 10,000/- then a simplified tax invoice is acceptable.
- No requirement to show Net Value of each product for each line item.
- It is mandatory to issue and deliver/give a Tax Invoice to the customer in case of every taxable supply.
See image below for reference:
Source: www.tax.gov.ae
3. Usage of Exchange Rates for Foreign Currency Invoices
- Foreign currency invoice must be converted to AED and the amount must be shown on Tax Invoice in AED.
- The supplier needs to use the exchange rate issued by the Central Bank of UAE on the date of supply.
You can download our Dual Currency Tax Invoice Excel Template.
4. Rounding off the Invoice to nearest Fils
- Each line item should be rounded in case of Detailed Tax Invoice and the gross amount in case of a simplified invoice.
- Rounding off should be taken to 2 decimals according to the mathematical rule of rounding off. If the third decimal is 5 or above add 1 fils. But if the third decimal is below 5 then will be rounded to the second digit of fils.
See image below for reference:
Source: www.tax.gov.ae
Disclaimer: The information provided above is for educational purpose and cannot be considered as a legal advice. We recommend you to consult Tax experts before making decisions. Reference to support the explanation have also been provided.
You can also download other UAE VAT templates like UAE VAT Payable Calculator, UAE VAT Multiple Tax Invoice, and Bilingual UAE VAT Invoice from our website.
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