In terms of global retail, the UAE is the fifth largest market in the world. Many companies in the UAE completely or mostly provide goods and services to recipients who are not registered under VAT.
For example: supermarkets, retail stores, restaurants, etc. There are also many companies that mainly provide goods and services to registrants, and sometimes provide goods and services to people who have not received VAT registration in the UAE.
Under these circumstances, should such companies issue detailed tax invoices for such supplies, which contain all the mandatory details required in the tax invoice? For most businesses dealing with customers who are not registered for VAT in the UAE, it is a difficult task to provide all the required details (such as the recipient’s address) in the VAT Tax invoice. At the same time, it is extremely important to issue an invoice certifying that it has been supplied.
In order to solve this problem, the “VAT Law” stipulates that when a person registered under VAT provides materials to a person who has not registered under VAT, a “simplified tax invoice” can be issued. Here, the recipient can be a retail customer or an enterprise whose turnover does not exceed the minimum value-added tax registration. You can visit our blog “VAT Registration” to learn more about the requirements for VAT registration in the UAE.
Let us take an example as an example to understand how a registrant can issue a simplified tax invoice based on value added tax.
Example: Jehan & Co., a registered person in Abu Dhabi, provides two keyboards to Mr. Ali, a consumer in Dubai. The simplified tax invoice issued by Jehan & Co. is as follows:
As you can see, the mandatory requirements in the simplified tax invoice are less detailed than those in the tax invoice. The main advantage of the simplified tax invoice is that the recipient’s name and address are not required. This is very useful for businesses that regularly deal with consumers or unregistered businesses. Such companies can now easily configure the software they use in the company for billing and faster invoice processing.
Finally, let us answer some frequently asked questions about simplified tax invoices.
Frequently Asked Question 1: Should the title of the simplified tax receipt be “simplified tax receipt”?
Answer: No, the title of the simplified tax invoice should be “tax invoice”.
FAQ 2: What is the main difference between tax invoice and simplified tax invoice?
A: The main difference between tax invoices and simplified tax invoices is that in simplified tax invoices, the recipient’s detailed information, namely name and address, is not required.
FAQ 3: Should VAT be charged for consumables for issuing simplified tax invoices?
Answer: Yes, VAT should be charged at the standard rate of 5% in the simplified tax invoice.
FAQ 4: Is the simplified tax invoice a valid input tax recovery voucher?
Answer: No. The simplified tax invoice is not a valid input tax recovery voucher because it does not mention the recipient’s TRN details. Therefore, if you are a registered business, please make sure that the supplier issues you a tax invoice containing your TRN.