UAE Announces Phased Implementation of the eInvoicing System

Executive Summary

The Ministry of Finance (MoF) has enacted a series of regulatory measures to implement the Electronic Invoicing System (EIS) in the UAE. These measures are codified through Ministerial Decisions No. 243, 244, and 64 of 2025. This guide provides a detailed and structured analysis of Ministerial Decision No. 244 of 2025, which specifically outlines the phased implementation approach, taxpayer segmentation, exclusions (such as B2C), and compliance expectations. It is essential reading for tax managers, finance professionals, and ERP integrators involved in VAT compliance.

1. Introduction

The Electronic Invoicing System (EIS) represents a strategic leap in the UAE’s digital tax infrastructure. It mandates that eligible businesses issue, receive, and store tax invoices and credit notes in machine-readable, structured formats through a secure government-integrated network. The system’s core objectives are to:

Enhance VAT compliance and reporting accuracy
Combat invoice fraud and shadow economy transactions
Enable real-time data visibility for tax audits
Improve business process automation

The legal foundation for this transformation is supported by several key ministerial and federal laws.

2. Legislative Authority

The EIS has been established under the authority of the following legislation:

Federal Decree-Law No. 8 of 2017 on VAT (as amended)
Federal Decree-Law No. 28 of 2022 on Tax Procedures
Ministerial Decision No. 243 of 2025 – Core rules of the EIS
Ministerial Decision No. 244 of 2025 – Implementation framework and taxpayer classification
Ministerial Decision No. 64 of 2025 – Accreditation criteria for Service Providers (ASPs)

These decisions serve as the binding framework governing the scope, obligations, timelines, and procedures of the EIS.

3. Who Is Covered by the EIS?

3.1 Applicability (Article 2 – Decision 244)

The EIS applies to:

Any VAT-registered Person who is subject to the Electronic Invoicing System under applicable regulations;
Any Person voluntarily opting to implement the EIS (from 1 July 2026);
Any additional categories of persons designated by future ministerial decisions.

3.2 Exclusion of B2C Transactions (Article 5(2))

“Business-to-Consumer Transactions shall not be subject to the Electronic Invoicing System and any Person engaged exclusively in such transactions shall not be subject to the Electronic Invoicing System, until such time determined by a decision issued by the Minister.”

Key takeaways:

Businesses exclusively engaged in B2C (Business-to-Consumer) transactions are currently exempt from the EIS.
B2C refers to transactions between a VAT-registered business and a natural person who is not carrying on business.
Inclusion of B2C under EIS requires a future ministerial decision. Until then, no mandatory e-invoicing for these cases.

3.3 Mixed Activity Businesses

Businesses engaged in both B2B and B2C must comply at least for their B2B/B2G transactions.
Partial exemptions are not applicable; covered transactions must be fully compliant once the EIS becomes applicable to the entity.

4. Implementation Timeline (Article 5)

The EIS will be implemented in phases, determined by a taxpayer’s Revenue during their most recent Accounting Period.

Category of Person	Deadline to Appoint ASP	Mandatory Go-Live Date
Pilot Group (Taxpayer Working Group)	N/A	1 July 2026
Revenue ≥ AED 50 million (Large)	31 July 2026	1 January 2027
Revenue < AED 50 million (Other)	31 March 2027	1 July 2027
In-scope Government Entities	31 March 2027	1 October 2027

Once an entity is subject to the EIS, it must adhere to all onboarding and technical specifications defined by the MoF and FTA.

5. Voluntary Adoption (Article 4)

From 1 July 2026, any business may choose to voluntarily implement the EIS prior to their mandatory deadline. Such adoption is irrevocable and comes with full compliance obligations:

Use of an Accredited Service Provider (ASP)
Adherence to Peppol BIS Billing 3.0 or PINT-AE data format
Full invoice lifecycle management via EIS
Proper archival, security, and digital signature practices

Voluntary participation is encouraged for larger B2C operators, especially those anticipating future expansion into B2B or export services.

6. Core Requirements

6.1 Issuance

Invoices must be issued in structured digital formats (XML/UBL/JSON).
Must include: UUID, TRN, timestamp, QR code, VAT breakdown, and total amount.
Must be signed with a cryptographic stamp.

6.2 Exchange via ASPs

Invoices are routed via a five-corner model:
- Supplier → Supplier’s ASP → EIS → Buyer’s ASP → Buyer

6.3 Validation and Error Handling

Invoices are validated in real-time through EIS.
Rejected invoices must be corrected and resubmitted within the applicable tax period.

6.4 Storage and Retention

All invoices must be retained for 5 years, hosted within the UAE.

7. Accredited Service Providers (ASPs)

ASPs are licensed entities certified by MoF under Ministerial Decision No. 64 of 2025. Businesses must:

Appoint an ASP before their designated deadline.
Notify FTA within 5 business days if ASP or business data changes.
Ensure that their ASP:
- Supports Peppol-compliant integration
- Offers secure, real-time exchange
- Maintains local data storage in the UAE

A public registry of certified ASPs will be maintained by the MoF/FTA.

8. Pilot Programme (Article 3)

The Pilot Programme launches on 1 July 2026.
It will include selected businesses that agree in writing to participate.
Participants (Taxpayer Working Group) will:
- Serve as early adopters and testers of EIS
- Provide feedback to MoF and FTA
- Adhere to full technical and compliance standards

9. Readiness Strategy for Businesses

Key Steps:

Conduct a VAT and invoice process audit.
Determine whether you fall under mandatory or voluntary EIS scope.
Select and contract an ASP.
Upgrade ERP/invoicing systems to generate XML/UBL-compliant e-invoices.
Educate internal teams on compliance workflows.
Implement backup and business continuity processes.

10. Penalties and Compliance Risk

Penalties for EIS non-compliance will be defined by the FTA under VAT Law.
Potential infractions:
- Failure to issue invoices in structured format
- Late ASP appointment
- Repeated validation rejections
- Data residency violations

It is expected that a separate FTA Decision will outline a detailed penalty matrix.

11. Conclusion

Ministerial Decision No. 244 of 2025 provides a clear and phased roadmap for the adoption of electronic invoicing in the UAE. While B2C transactions are currently excluded, all B2B and B2G activities must follow strict onboarding and technical procedures under the EIS. Businesses are strongly advised to begin preparations early to ensure a smooth transition, avoid non-compliance penalties, and gain the efficiency benefits of digital tax processes.