Under the UAE’s new Electronic Invoicing System, businesses must create, exchange, and report invoices electronically to the Federal Tax Authority (FTA) in a structured, machine-readable format such as XML. This system replaces traditional paper or PDF invoices, ensuring greater accuracy, transparency, and efficiency in VAT and tax processes.

The UAE introduced e-invoicing requirements in the second quarter of 2025, and the first phase will officially go live in July 2026. In preparation for the rollout, the Ministry of Finance has issued a detailed penalty framework through Cabinet Decision No. 106 of 2025, outlining fines for businesses that fail to comply.

Penalties for Violating UAE E-Invoicing Rules

Below are the penalties specified under Article 106 of Cabinet Decision 106 of 2025:

1. Failure to implement the e-invoicing system

• Dh5,000 per month (or part-month)
  Applies when the issuer does not onboard the e-invoicing system or fails to appoint an accredited service provider within the required timeline.

2. Delay in issuing or transmitting e-invoices

• Dh100 per invoice, capped at Dh5,000 per month
  Issued when the business does not generate and transmit e-invoices to the recipient through the system on time.

3. Delay in issuing or transmitting electronic credit notes

• Dh100 per credit note, capped at Dh5,000 per month
  Applies when credit notes are not issued or transmitted within the required deadline.

4. Failure to notify the FTA of a system failure

• Dh1,000 per day (or part-day)
  Applies when the issuer does not inform the authority promptly about system downtime.

5. Recipient failure to notify the FTA of a system failure

• Dh1,000 per day (or part-day)
  Applies when recipients do not report system failures within the specified timeline.

6. Failure to update registered data

• Dh1,000 per day (or part-day)
  Issued when the issuer or recipient does not inform their accredited service provider of changes to registered data on time.

Expert Insights on the New E-Invoicing Penalties

Thomas Vanhee, Founding Partner at Aurifer, highlighted that the Cabinet Decision formalizes penalties that will enforce compliance with the e-invoicing regime.

Anurag Chaturvedi, CEO of Andersen UAE, noted that e-invoicing is now a mandatory compliance requirement with significant financial consequences.

He emphasized several key points:

E-invoicing is no longer optional for in-scope businesses

Companies experimenting with e-invoicing voluntarily are not the target. Penalties specifically aim at businesses mandated to adopt the system.

Delays will directly cost businesses

Missing implementation deadlines—such as failing to onboard an accredited provider—will result in Dh5,000 per month in penalties. This effectively makes e-invoicing readiness a board-level priority.

Document transmission is a major focus

If invoices or credit notes are created but not transmitted through the official system on time, penalties of Dh100 per document apply, capped monthly. This signals the regulator’s emphasis on transaction-level accuracy and consistency.

System failure is the highest risk area

Failure to promptly notify the FTA during a system outage results in Dh1,000 per day penalties.
Even minor disruptions can quickly escalate if communication and reporting processes are weak.

Data governance becomes a compliance requirement

Not updating changes in registered business information with the accredited provider can also trigger Dh1,000 per day fines.
This elevates master data management from an administrative task to a regulated obligation.

The UAE is transforming e-invoicing into an integrated regulatory framework. Businesses must invest in:

• Systems readiness

• Strong internal controls

• Robust incident-response processes

• Accurate and timely data management

With penalties now clearly defined, compliance delays directly translate into financial loss. Companies should begin preparing well ahead of the July 2026 rollout to avoid unnecessary costs.