If you are running a business in the UAE and are VAT registered, issuing a proper VAT invoice is a legal requirement under UAE VAT Law. Whether you are a startup, freelancer, or established company, knowing how to create a VAT invoice correctly helps you stay compliant and avoid penalties.
This guide explains what a VAT invoice is, who needs it, and how to create one correctly in the UAE.
✅ What Is a VAT Invoice in UAE?
A VAT invoice is an official document issued by a VAT-registered business to its customer, showing the value of goods or services supplied and the VAT charged (5%).
VAT invoices are required for:
Tax reporting
Claiming VAT input
Audit and compliance purposes
✅ Who Must Issue a VAT Invoice?
You must issue a VAT invoice if:
Your business is VAT registered with the Federal Tax Authority (FTA)
You supply taxable goods or services in the UAE
Your turnover exceeds AED 375,000 per year
📋 Mandatory Details on a VAT Invoice (UAE)
According to UAE VAT Law, a valid VAT invoice must include:
🔹 Seller Details
Business name
Address
TRN (Tax Registration Number)
🔹 Invoice Details
Invoice number (unique)
Invoice issue date
Supply date (if different)
🔹 Customer Details
Customer name
Address
Customer TRN (if VAT registered)
🔹 Description
Description of goods/services
Quantity
Unit price
🔹 VAT Breakdown
Taxable amount (AED)
VAT rate (5%)
VAT amount
Total amount including VAT
🔹 Currency
Must be in AED
🧮 Example VAT Calculation
If service value = AED 1,000
VAT (5%) = AED 50
Total invoice amount = AED 1,050
🛠️ How to Create a VAT Invoice in UAE
Method 1: Using Accounting Software
Popular tools:
Zoho Books
QuickBooks
Xero
Tally
These automatically calculate VAT and generate compliant invoices.
Method 2: Using Excel or Word
You can create a VAT invoice manually using:
Microsoft Excel
Google Sheets
Word
⚠️ Ensure all mandatory VAT details are included.
Method 3: Using Online Invoice Generators
Many UAE businesses use invoice templates designed for UAE VAT compliance.
📌 Difference Between Tax Invoice & Simplified Tax Invoice
🔹 Tax Invoice
For VAT-registered customers
Must include customer TRN
🔹 Simplified Tax Invoice
For customers not VAT registered
Used when invoice value is below AED 10,000
⚠️ Common VAT Invoice Mistakes to Avoid
❌ Missing TRN
❌ Incorrect VAT calculation
❌ No invoice number
❌ Charging VAT without registration
❌ Issuing invoice in foreign currency
These mistakes can lead to FTA penalties.
