Is e-invoicing or digital invoicing a legal way to invoice in the UAE?
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We know invoicing may be a very tedious process for any entrepreneur or a small business owner. Despite that, it’s one of the most vital tools of accounting and bookkeeping. As it’s widely known, it acts as proof of sale and aids in smooth tax filing when the VAT season rolls in. Not to forget, it encourages payments from the customers and helps in building lasting business relations. Most of an entrepreneur’s day revolves around dealing with other businesses and exchanging transactions with them. With the upsurge of electronic or digital invoicing, many entrepreneurs have found it easy to manage payments and ensure faster transactions. Electronic records, documents, and signatures relating to electronic transactions have been given legal recognition in the UAE. E-invoicing complies with UAE law and the regulations regarding its legality have been in place, which makes it an authentic mode of invoicing. The implementation of VAT has made proper, accurate invoicing necessary for businesses. As per the Federal Decree Law No. 8 of 2017 on VAT, both written and/or electronic form of invoices are recognized and accepted. VAT registered companies have to comply with the record-keeping requirements of the FTA and store copy of their invoices for at least 5 years. The Taxable Person can issue tax invoices electronically. In such a case, safe and secure storage of e-invoices become easy. Digital archiving of invoices facilitates smooth audit by the FTA. Every year, almost 1 billion pieces of paper are used in government transactions, which will be eliminated in 2021. With the Smart Dubai initiative, the government will go paper-free and accept electronic forms of documents across its operations. All transactions will be digital from 2021 with the paperless government, saving resources and time. You wouldn’t have to present paper documents for any government work. Having environmental implications, this initiative will be carried out with the implementation of necessary technologies and legal framework.
What should E-invoices entail?
The electronic invoices must have the following components:
- It must comply with technological requirements.
- The e-invoice must be maintained in the same format and with the same content as it was exchanged without any alterations.
- Every e-invoice must have a timestamp on it to show that it hasn’t been changed since the first time it was created and must be available for print or displayed online.
- The e-invoice must be clear enough to be readable.
- It must have an electronic signature to establish the authenticity and verification of data.
What are the available options?
VAT compliant invoicing software is one of the easiest ways to venture into the arena of digital invoicing. It lets you store your data on the cloud that you can access from anywhere. With an in-built tax calculator and templates available, you can create and share invoices with your customers through the software and manage all the payments. McLedger’s Invoicing software does all this and more. It integrates with the accounting application for complete bookkeeping so you don’t have to spend any more time or effort on this. If you want to opt for digital invoicing and let go of all the hassles of storing piles of paper, get in touch with us today. Our VAT consultants and accounting experts would be happy to provide a free consultation to help you in making the best decision for your business.