The spread of e-invoicing has become one of the major themes in global tax over the past few years, with tax authorities around the world looking to increase compliance and reduce tax abuse and fraud.
E-invoicing systems take many forms but, essentially, they involve the transmission of invoices between suppliers and buyers in a standardised, machine-readable format, such as XML, rather than relying on paper or PDF invoices. The process is supported by protocols and verification that ensure increased levels of certainty and security for buyers and sellers. Additionally, the process has the potential to allow the tax authority to gather and store information on taxpayer transactions. The exchange of information is facilitated by prescribed networks, such as PEPPOL, DBNA or similar communication protocols. Depending on the capabilities of the relevant network and standards set by the relevant tax authority, there could be hard clearance - i.e. real time validation of invoices by the tax authority’s systems, or soft clearance - i.e. a preliminary clearance without final validation by the tax authority.
Saudi Arabia was the first of the GCC countries to begin the implementation of e-invoicing. The rollout began in December 2021, with a phased approach that has gradually brought more and more businesses into scope.
The UAE has now joined this movement, with the publication of an e-invoicing framework that will begin to be rolled out with effect from quarter two of 2026. Like the Saudi system, this is expected to be a phased implementation, although final details have not yet been released.
Oman was the third GCC country to announce its plans for e-invoicing, with implementation expected to commence in the third quarter of 2026. Bahrain has taken some initial steps towards e-invoicing, including that of issuing a tender and formal announcements, and firm plans are expected in due course. Kuwait and Qatar may possibly look at implementing e-invoicing along with implementation of VAT, but any firm announcement on either the implementation of a VAT regime or e-invoicing is awaited.
In this article, we will focus on the UAE system, which is moving forward quickly, with new information and guidance regularly emerging from the UAE Ministry of Finance. Although each e-invoicing system has its own individual characteristics, many of the points of interest and practice points that are highlighted by the UAE system will be helpful to businesses that need to deal with implementing e-invoicing in other jurisdictions.
The UAE system is usually referred to as ‘eInvoicing’ (without a hyphen but with a capital ‘I’) by the UAE authorities and we will therefore use that name going forward. The system uses a ‘five-corner model’, as illustrated in the diagram below. The five corners, or parties, being the seller, the seller’s authorised service provider (ASP), the buyer, the buyer’s ASP and the UAE authorities: the Federal Tax Authority (FTA) and the Ministry of Finance.
The five-corner model
The diagram gives a very high-level outline of the five-corner model. It does not illustrate the full complexity of data flows or the functions and actions of each corner.
The key component of the PEPPOL-based five-corner model is the ASP. This is an independent service provider that offers a digital platform allowing the taxpayer to meet its eInvoicing obligations. Essentially, the ASP acts as a bridge between the taxpayer and the FTA, helping to generate, transmit, receive and store electronic invoices in a compliant format. The ASP must meet the technical standards set by the eInvoicing legislation and needs to be approved by the FTA.
The scope of the eInvoicing initiative is very broad, encompassing all B2B (business to business) and B2G (business to government) supplies that are taxable for VAT purposes. This covers:
Under the current proposals B2C (business to consumer) supplies are excluded.
Another key feature of the eInvoicing regime in the UAE is the requirement to include Harmonised System of Nomenclature (HSN) codes or service codes on invoices. The full invoicing requirements are set out in the UAE PINT dictionary, which defines the data fields and formats used in documents exchanged via PEPPOL.
With such a significant change on the horizon, businesses will need to be properly prepared for the change and will have to start planning well in advance. Some of the key steps businesses should be taking are outlined below.
Firstly, it’s important that all businesses keep abreast of the proposals and the timelines. They should therefore make sure they review all new official announcements and guidance. As implementation will probably take place in phases, the FTA should notify taxpayers of their integration deadline. Nonetheless, taxpayers should be proactive and stay on top of the process and news flow.
One of the key steps to successful implementation will be to review current invoicing and ERP/accounting systems to establish whether the current system can generate invoices in the required format and whether there are any barriers to integration. Following this review, the business will know whether upgrades are required and will be able to begin the process of identifying an appropriate ASP.
As part of the process the business will need to train finance, accounting, tax and IT teams on the new eInvoicing procedures, update operating manuals and ensure all internal stakeholders are properly briefed.
Proper coordination of all these steps is essential and a project team with an experienced leader and clear terms of reference will be essential, particularly for larger businesses. It’s also important to engage with all parts of the organisation that might be affected: this should not be regarded as a purely tax- or finance-driven initiative.
How BDO can help
BDO’s dedicated eInvoicing team can help with this process, offering a combination of the necessary technical skills and deep experience of implementation and transformational projects. We have also developed a UAE-specific eInvoicing solution and, at the time of writing, are in the process of obtaining FTA accreditation.
E-invoicing is sweeping the world and the GCC is pushing toward the forefront of this movement, - with the UAE system and its five-cornered model introducing new levels of sophistication. The changes might seem daunting at first, but they should bring significant benefits in the long run, with the potential for greater data security, increased transparency, reduced costs and a reduction in tax avoidance and evasion.
If you would like to know more about this subject and to find out how BDO can assist your business in preparing for eInvoicing - or receive more information on our ASP services and solutions - we would be pleased to hear from you.
Author: Ashish Athavale, Tax advisory services partner
E-invoicing systems take many forms but, essentially, they involve the transmission of invoices between suppliers and buyers in a standardised, machine-readable format, such as XML, rather than relying on paper or PDF invoices. The process is supported by protocols and verification that ensure increased levels of certainty and security for buyers and sellers. Additionally, the process has the potential to allow the tax authority to gather and store information on taxpayer transactions. The exchange of information is facilitated by prescribed networks, such as PEPPOL, DBNA or similar communication protocols. Depending on the capabilities of the relevant network and standards set by the relevant tax authority, there could be hard clearance - i.e. real time validation of invoices by the tax authority’s systems, or soft clearance - i.e. a preliminary clearance without final validation by the tax authority.
Saudi Arabia was the first of the GCC countries to begin the implementation of e-invoicing. The rollout began in December 2021, with a phased approach that has gradually brought more and more businesses into scope.
The UAE has now joined this movement, with the publication of an e-invoicing framework that will begin to be rolled out with effect from quarter two of 2026. Like the Saudi system, this is expected to be a phased implementation, although final details have not yet been released.
Oman was the third GCC country to announce its plans for e-invoicing, with implementation expected to commence in the third quarter of 2026. Bahrain has taken some initial steps towards e-invoicing, including that of issuing a tender and formal announcements, and firm plans are expected in due course. Kuwait and Qatar may possibly look at implementing e-invoicing along with implementation of VAT, but any firm announcement on either the implementation of a VAT regime or e-invoicing is awaited.
In this article, we will focus on the UAE system, which is moving forward quickly, with new information and guidance regularly emerging from the UAE Ministry of Finance. Although each e-invoicing system has its own individual characteristics, many of the points of interest and practice points that are highlighted by the UAE system will be helpful to businesses that need to deal with implementing e-invoicing in other jurisdictions.
The UAE system is usually referred to as ‘eInvoicing’ (without a hyphen but with a capital ‘I’) by the UAE authorities and we will therefore use that name going forward. The system uses a ‘five-corner model’, as illustrated in the diagram below. The five corners, or parties, being the seller, the seller’s authorised service provider (ASP), the buyer, the buyer’s ASP and the UAE authorities: the Federal Tax Authority (FTA) and the Ministry of Finance.
The five-corner model
The diagram gives a very high-level outline of the five-corner model. It does not illustrate the full complexity of data flows or the functions and actions of each corner.
The key component of the PEPPOL-based five-corner model is the ASP. This is an independent service provider that offers a digital platform allowing the taxpayer to meet its eInvoicing obligations. Essentially, the ASP acts as a bridge between the taxpayer and the FTA, helping to generate, transmit, receive and store electronic invoices in a compliant format. The ASP must meet the technical standards set by the eInvoicing legislation and needs to be approved by the FTA.
The scope of the eInvoicing initiative is very broad, encompassing all B2B (business to business) and B2G (business to government) supplies that are taxable for VAT purposes. This covers:
- Taxable supplies (standard and zero-rate supplies for VAT)
- Deemed supplies, such as business assets used for personal use
- Exports of goods and services
- Self-billed invoicing
- Credit notes.
Under the current proposals B2C (business to consumer) supplies are excluded.
Another key feature of the eInvoicing regime in the UAE is the requirement to include Harmonised System of Nomenclature (HSN) codes or service codes on invoices. The full invoicing requirements are set out in the UAE PINT dictionary, which defines the data fields and formats used in documents exchanged via PEPPOL.
With such a significant change on the horizon, businesses will need to be properly prepared for the change and will have to start planning well in advance. Some of the key steps businesses should be taking are outlined below.
Firstly, it’s important that all businesses keep abreast of the proposals and the timelines. They should therefore make sure they review all new official announcements and guidance. As implementation will probably take place in phases, the FTA should notify taxpayers of their integration deadline. Nonetheless, taxpayers should be proactive and stay on top of the process and news flow.
One of the key steps to successful implementation will be to review current invoicing and ERP/accounting systems to establish whether the current system can generate invoices in the required format and whether there are any barriers to integration. Following this review, the business will know whether upgrades are required and will be able to begin the process of identifying an appropriate ASP.
As part of the process the business will need to train finance, accounting, tax and IT teams on the new eInvoicing procedures, update operating manuals and ensure all internal stakeholders are properly briefed.
Proper coordination of all these steps is essential and a project team with an experienced leader and clear terms of reference will be essential, particularly for larger businesses. It’s also important to engage with all parts of the organisation that might be affected: this should not be regarded as a purely tax- or finance-driven initiative.
How BDO can help
BDO’s dedicated eInvoicing team can help with this process, offering a combination of the necessary technical skills and deep experience of implementation and transformational projects. We have also developed a UAE-specific eInvoicing solution and, at the time of writing, are in the process of obtaining FTA accreditation.
E-invoicing is sweeping the world and the GCC is pushing toward the forefront of this movement, - with the UAE system and its five-cornered model introducing new levels of sophistication. The changes might seem daunting at first, but they should bring significant benefits in the long run, with the potential for greater data security, increased transparency, reduced costs and a reduction in tax avoidance and evasion.
If you would like to know more about this subject and to find out how BDO can assist your business in preparing for eInvoicing - or receive more information on our ASP services and solutions - we would be pleased to hear from you.
Author: Ashish Athavale, Tax advisory services partner