FOUNDATION / E-INVOICING 101
An eInvoice is structured invoice data issued, transmitted and received in a format that enables automated processing and reporting.
THE DEFINITION
The UAE Ministry of Finance states that PDFs, Word files, images, scanned copies and emails are not e-invoices. The distinction is structure, validation, electronic exchange and reporting.
One can imagine an e-invoice as a text document abiding to certain rules and passing certain validations that can be exchanged between systems (your ERP and your client’s ERP and vice versa).
A PDF can act as a wrapper to the e-invoice (text document) and show it in a human readable way.
WHAT IT ACTUALLY MEANS
Current issued forms of invoices (paper, email, pdf, etc.) will be no longer valid. All invoices should be issued in a predefined way from your system.
Your system will transmit it to your Accredited Service Provider (ASP) who will perform validity checks and will forward it to both the Federal Tax Authority (FTA) and the ASP of your client. Your client’s ASP will forward it eventually it to your client.
The same way you will be receiving your invoices from your local vendors.
The invoices received can be easily imported to your system providing time and cost efficiencies.
All invoices (sales and purchase) will be sitting in your ASPs portal too and can be retrieved from there as well.
HOW IT WORKS
UAE has elected Peppol as the framework of choice and the 5-corner implementation the one to be used.
The supplier (Corner 1), supplier ASP (Corner 2), buyer ASP (Corner 3), buyer (Corner 4) and Federal Tax Authority (Corner5) exchange invoice and tax data through a decentralised continuous transaction control and exchange model.
C1
Creates invoice data from an ERP, accounting system or business application.
C2
Validates and converts the data to the UAE standard XML where required.
Forwards the e-invoice to Buyer ASP and the FTA.
C3
Receives and validates the e-Invoice, then returns message-level status information.
Forwards the e-invoice to Buyer and the FTA.
C4
Receives the invoice in an agreed format through its appointed ASP.
C5
Receives the Tax Data Document from both ASPs and returns reporting status information.
PINT-AE
Defines the UAE invoice specification within the Peppol interoperability framework.
BUSINESS VALUE
01
Reduce repetitive checking across finance operations.
02
Move validated invoice data between parties in near real time.
03
Use consistent, machine-readable information for controls and analysis.
04
Retain traceable records, validations and message statuses.
05
Issuing an e-invoice costs and making mistakes costs even more.
06
Importing received invoices directly to your ERP can reduce posting times and cost generate efficiencies.
07
Updated procedures on both AR and AP side to safeguard correct issue of documents.
08
Retain traceable records, validations and message statuses.
Source note: Definitions and model summary are based on the UAE Ministry of Finance eInvoicing portal. This publication provides general information, not legal or tax advice.
