(MENAFN- Khaleej Times)

The UAE's Ministry of Finance has issued penalties and fines for violations of the legislation regulating system ahead of the rollout in July 2026.

According to Cabinet Decision No. 106 of 2025, penalties range from Dh100 a day to Dh5,000 per month for violations and administrative penalties resulting from non-adherence to the electronic invoicing (e-invoicing) system.

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Under the UAE Electronic Invoicing System, invoices are created, exchanged, and reported electronically to the Federal Tax Authority (FTA) in a structured, machine-readable format like XML, replacing traditional paper or PDF invoices to improve accuracy, transparency, and efficiency in VAT and other tax-related processes.

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The UAE introduced e-invoicing regulations in the second quarter of 2025. The first phase of e-invoicing will go live in the country in July 2026.

As per the Cabinet Decision, here are the penalties prescribed in Article 106 of 2025.

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Dh5,000 fine in case of delay for each month or part thereof for failure by the issuer to implement the e-invoicing system, including the failure to appoint an accredited service provider within the timeline.

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Dh100 penalty for each electronic invoice up to a maximum of Dh5,000 per calendar month to the issuer for not issuing and transmitting an e-invoice to the recipient through the e-invoicing system within the timeline.

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Dh100 fine for each electronic credit note up to a maximum of Dh5,000 per calendar month for failure by the issuer to issue and transmit an electronic credit note to the recipient through the electronic invoicing system within the timeline.

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A fine of Dh1,000 for each day of delay or part thereof for failure by the issuer to notify the authority of a system failure within the timeline.

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Dh1,000 fine for each day of delay or part thereof for failure by the recipient to notify the authority of a system failure within the timeline.

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Dh1,000 fine for each day of delay or part thereof for failure by the issuer or the recipient to notify the appointed accredited service provider of changes to the data registered with the authority within the timeline.

Thomas Vanhee, founding partner of Aurifer, said the Cabinet decision foresees penalties for the enforcement of the e-invoicing regime.

Anurag Chaturvedi, CEO of Andersen in the UAE, said e-invoicing is now a compliance obligation with defined financial consequences.

“These penalties are aimed at businesses that are mandated to onboard the UAE's Electronic Invoicing System under the tax procedures framework. Companies experimenting with e-invoicing voluntarily are not the target. For everyone in scope, enforcement is no longer theoretical - it is measurable.”

He elaborated that from a business perspective, the decision creates a clear cost of delay.

“If a company misses the deadline to implement e-invoicing or appoint an accredited service provider, the fine is Dh5,000 for each month (or part of a month). In other words, readiness becomes a board-level KPI: every month of slippage has a price tag,” he added.

Andersen UAE's CEO noted that if invoices or credit notes are issued but not transmitted through the system within the required timeline, penalties apply at Dh100 per document, capped at Dh5,000 per month for invoices and separately for credit notes. The cap softens the blow, but it also signals what regulators are prioritising: consistent transactional discipline.

He cautioned that the sharpest risk sits in incident management, where a system failure occurs, as both issuers and recipients must notify the authority on time or face a Dh1,000 per day (or part-day) fine.
“A minor outage can quickly turn into a compounding compliance exposure if reporting processes are weak or IT–finance coordination is slow.”

Finally, the decision pushes for stronger governance of business data.“Failure to notify the accredited provider of changes to registered information can also trigger Dh1,000 per day penalties - making master data controls a compliance requirement, not an admin task.”

“The bottom line is that the UAE is turning e-invoicing into a regulated operating model - driving investment in systems readiness, controls, and rapid incident response,” he concluded.

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