UAE to Launch Electronic Invoicing Pilot in July 2026

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UAE Ministry of Finance to pilot electronic invoicing system starting July 2026.

The UAE's e-invoicing pilot programme begins on 1 July 2026, with voluntary adoption available to all businesses from that date.
Large businesses with annual revenue of AED 50 million or more must comply by 1 January 2027.
SMEs face a mandatory implementation deadline of 1 July 2027, while government entities must comply by 1 October 2027.
The system uses the Peppol 5-Corner Model, requiring businesses to appoint Accredited Service Providers.
Penalties for non-compliance include fines of up to AED 5,000 per month for failing to implement the system.
B2B and B2G transactions are covered, while B2C transactions are currently excluded.

The UAE Ministry of Finance has announced that the pilot phase of the national electronic invoicing system will launch on 1 July 2026. The announcement was made on 29 January 2026 during an awareness event held in partnership with the Federal Tax Authority, marking a significant milestone in the government's digital transformation agenda.

H.E. Younis Haji AlKhoori, Undersecretary of the Ministry of Finance, stated that the e-invoicing system "plays a key role in supporting the UAE's efforts seeking to build an integrated digital financial system that enhances efficiency and promotes transparency across the national economy."

Phased Implementation Timeline

The UAE has adopted a strategic phased approach to ensure a smooth transition for businesses. From 1 July 2026, any business can voluntarily opt into the e-invoicing system during the pilot phase, which will involve a selected Taxpayer Working Group testing the system under Ministry and FTA supervision.

Large businesses with annual revenue of AED 50 million or more must appoint an Accredited Service Provider by 31 July 2026 and achieve mandatory compliance by 1 January 2027. Small and medium enterprises with revenue below the AED 50 million threshold have until 31 March 2027 to appoint an ASP, with mandatory implementation required by 1 July 2027. Government entities follow a similar timeline, with mandatory compliance from 1 October 2027.

Technical Framework and Requirements

The UAE has adopted the Peppol 5-Corner Model as the foundation for its e-invoicing framework. This decentralised approach differs from Saudi Arabia's centralised ZATCA model, as invoices are exchanged directly between businesses via ASPs with parallel reporting to the FTA, rather than requiring pre-clearance from the tax authority.

All e-invoices must use the PINT AE format, based on the UBL 2.1 standard and issued in XML format. PDF, Word, Excel, images, and scanned copies will not qualify as valid e-invoices once the system becomes mandatory. Businesses must ensure their ERP and accounting systems can create structured invoices, apply digital signatures, and integrate directly with their appointed ASP.

Scope of Application

The e-invoicing mandate applies to all business-to-business and business-to-government transactions. Covered entities include VAT-registered businesses, free zone companies, non-resident businesses with taxable supplies in the UAE, and SMEs including sole traders. Business-to-consumer transactions are currently excluded but may be included in future phases through a separate ministerial decision.

Electronic invoices must be issued within 14 days from the date of the business transaction, with both issuers and recipients required to report through the Electronic Invoicing System within timelines prescribed by the Minister.

Penalties for Non-Compliance

Cabinet Decision No. 106 of 2025 establishes a comprehensive penalty framework that takes effect once e-invoicing becomes mandatory for each business category. Failing to implement the system or appoint an ASP within the required timeframe attracts a fine of AED 5,000 per month. Each electronic invoice or credit note not issued or transmitted within specified timeframes incurs a penalty of AED 100, capped at AED 5,000 per calendar month.

Businesses that fail to notify the FTA of a system failure within the prescribed timeline face fines of AED 1,000 per day. No penalties apply during the voluntary or pilot phases, providing businesses an incentive to adopt early and test their systems before enforcement begins.

Business Benefits and Preparation

The Ministry of Finance estimates that businesses can reduce invoice processing costs by up to 66 per cent through digital invoicing. Additional benefits include elimination of manual data entry errors, faster transaction processing, improved cash flow, and enhanced audit readiness through structured digital records.

H.E. Khalid Ali Al Bustani, Director General of the FTA, noted that the system "offers significant benefits to stakeholders across the tax ecosystem by simplifying, standardising, and automating invoicing processes through an electronic platform aligned with global best practices." Businesses are advised to conduct gap analyses of their current invoicing systems and begin ASP selection processes well ahead of their mandatory deadlines.