BrazilUAE to mandate e-invoicing in 2026: What businesses must know and do
The UAE’s decision to mandate electronic invoicing (e-invoicing) by July 2026 for B2B and B2G transactions marks a pivotal step in the nation’s economic transformation. Naishadh Soneta, Managing Director at FTI Consulting, outlines what businesses must know and do for achieving compliance.
Following the lead of Saudi Arabia, which implemented its own e-invoicing mechanism in 2021, the UAE now seeks to modernise its tax infrastructure, improve transparency and enhance operational efficiency across sectors.
The Ministry of Finance (MoF) has also released a dedicated webpage on e-invoicing providing details regarding e-invoicing implementation in the UAE and its phased rollout towards Q2 2026. The Ministry of Finance has also published FAQs, providing clarifications on important aspects of the e-invoicing model to be implemented in the UAE.
Further, the Federal Decree-Law No. 16 of 2024 published on 30 September 2024 amended the UAE VAT Law to clearly set out the legal framework for e-invoicing, making electronic invoices a valid document for UAE VAT Law purposes (including input tax recovery). Similarly, Federal Decree-Law No. 17 of 2024 was also published to amend key provisions of the Tax Procedures Law from e-invoicing perspective.
E-invoicing serves as more than just a bureaucratic necessity – it is a strategic effort aimed at improving the UAE’s tax compliance system and bringing it in line with global standards. By mandating that invoices be generated, exchanged, and stored electronically in real-time, the UAE Government aims to minimise human intervention and eliminate the risk of fraud and inefficiencies inherent in current systems.
This reform specifically highlights UAE’s dedication to promoting a transparent and accountable business environment.
What businesses must know and do
The implementation of e-invoicing is proposed to be in a phased manner, beginning with the accreditation of service providers in 2024, followed by publication of the e-invoicing related legislation in 2025, and the go-live of Phase 1 compulsory adherence for big corporations by mid-2026. All businesses, regardless of their size and VAT registration status, need to be ready to switch from traditional billing systems to platforms which provide real-time reporting to the Federal Tax Authority (FTA).
For companies operating in the UAE, this shift to e-invoicing demands significant changes. Businesses will have to show agility and adaptability, from undertaking 1) gap analysis, 2) ensuring system readiness, 3) become an Accredited Service Providers (‘ASP’) or partner with an ASP and 4) training employees for implementing e-invoicing in the current ERP systems.
Implementing e-invoicing is not just a technical transformation but also a significant organizational change. Companies must also:
- assess organizational readiness by evaluating how e-invoicing will impact existing processes, systems and teams and build awareness within the organization
- identify key internal and external stakeholders (e.g., employees, suppliers, and customers) who will be affected by the transition
- create a cross-functional focus group involving finance (including AR & AP), IT, operations and tax to drive the initiative.
For multinational companies, a meticulous coordination of global and local operations is crucial when adapting to this change, particularly for large corporations with intricate supply chains. In the meantime, SMEs might encounter early obstacles connected to associated cost / expenses and the implementation of technology. Nevertheless, SMEs can benefit greatly from enhanced visibility into cash flow and simplified VAT reporting once the system is implemented.
Around the world, e-invoicing has had a transformative impact in nations like Italy and Mexico, leading to a substantial decrease in tax evasion and enhancing government tax revenues. Building on these achievements worldwide, the UAE is ready to develop a strong structure suited to its specific economic and regulatory landscape. Closer to home, even in Saudi Arabia, initial adoption was met with hesitation, but once the early challenges were resolved, the benefits were widely recognized.
Sector-wise impact and opportunities
Certain industries will be more impacted by e-invoicing than others. Retail, hospitality, and e-commerce companies that deal with substantial amounts of transactions must make significant investments in compliance tools to guarantee smooth processing and reporting of data in their systems. Likewise, manufacturing and distribution companies must work together with suppliers to guarantee compliance throughout supply chains.
The financial, insurance and real estate sectors, already accustomed to complex regulatory frameworks, will find themselves needing an advanced e-invoicing solutions to manage their VAT compliance effectively. For SMEs, e-invoicing could serve as a levelling force, enabling smaller players to adopt world-class invoicing practices that enhance operational efficiency and improve competitiveness.
Compliance is non-negotiable
The administrative penalties for failure to issue tax invoices or tax credit notes have been extended to include failure to issue e-invoices or e-notes. The UAE government has been clear: non-compliance with e-invoicing regulations will result in penalties and potential disruptions to business operations, making early preparation even more crucial for businesses. They must not only adopt the necessary technology, but also ensure that the current VAT configurations and logic (including tax codes) are up to date and their teams are adequately trained to manage new processes.
For the UAE, e-invoicing represents an opportunity to reinforce its position as a regional and global leader in economic innovation. For businesses, it is an opportunity to modernize operations, reduce costs, and build trust in their financial dealings with the regulators. By implementing this system, companies are not just fulfilling regulatory requirements but also integrating well into a digital-first economy. The time to act is now – before deadlines loom and penalties arise.
