VAT invoicing in the UAE: a guide for agencies

Do you need to register?

VAT has applied in the UAE since 1 January 2018, at a standard rate of 5%. An agency must register with the Federal Tax Authority (FTA) when the value of its taxable supplies over the previous twelve months passes AED 375,000, or when it expects to pass that figure in the next 30 days. Below that, a business can choose to register once its supplies or expenses pass AED 187,500.

Registration is about the business, not each client. Retainers, project fees, production and the influencer fees you rebill all count towards the total, so an agency that passes through large media or talent costs can reach the threshold sooner than its own margin would suggest.

Once registered, you receive a 15-digit Tax Registration Number (TRN), charge VAT on your taxable supplies, file returns (usually quarterly) and keep records, generally for at least five years.

When to issue a tax invoice

A registered supplier issues a tax invoice for a taxable supply, generally within 14 days of the date of supply. For a service, the date of supply is usually the earliest of when the service is completed, when payment is received, or when the invoice is issued. For a monthly retainer, that normally means each month is its own supply.

Billing in advance, which most agencies do, is fine. The invoice date or the payment date then fixes when the VAT is due, so issue the invoice in the period you want to account for it.

What a full tax invoice must show

• The words "Tax Invoice", clearly displayed.
• Your name, address and TRN.
• The client's name and address, and their TRN if they are registered.
• A sequential invoice number that identifies the invoice and the order it was issued in.
• The date of issue, and the date of supply if it is different.
• A description of what was supplied.
• For each line: the quantity or volume, the unit price, the VAT rate and the amount payable, in AED.
• Any discount given.
• The total amount payable, and the total VAT, in AED.
• If the invoice is in another currency, the VAT amount in AED and the exchange rate used.
• Where the client must account for the VAT under the reverse charge, a statement saying so.

The free UAE tax invoice template on this site is laid out with each of these in place.

Simplified tax invoices

A simplified tax invoice, with fewer details, can be used when the client is not VAT-registered, or when the client is registered and the supply is worth AED 10,000 or less. Most agency invoices are to registered businesses and above that figure, so in practice most agencies issue full tax invoices.

Clients outside the UAE

Agencies in Dubai often work for brands based in Saudi Arabia, Europe or elsewhere. Some services supplied to a client outside the UAE can be zero-rated as an export, which means VAT is charged at 0% but the supply still appears on your return.

The conditions are specific. Broadly, the client must not have a place of residence in the UAE and must be outside the UAE when the services are performed, and the services must not be connected with goods or property in the UAE or used by someone in the UAE. A campaign run for a foreign brand's UAE launch, with a UAE-based marketing team receiving the work, may not qualify. When in doubt, take advice before invoicing at 0%, because the VAT becomes yours to pay if the zero rate is wrong.

Remember that the client's own country may charge its own VAT on services it imports. A Saudi client, for example, generally accounts for Saudi VAT under the reverse charge.

Influencer and talent fees

When you pay a creator and rebill the fee to your client, the way the arrangement is set up matters. If you contract the creator and supply the campaign to your client, the whole amount is usually your supply and carries VAT. If you act only as a disclosed agent in the client's name, different rules can apply. Many creators are not VAT-registered, so their invoice to you may have no VAT on it, while your invoice to the client does.

Credit notes and corrections

Never edit or reissue an invoice that has been sent. If the amount changes, a fee is reduced, or work is cancelled after invoicing, issue a tax credit note that refers to the original invoice. It needs similar details to a tax invoice, including the value of the change and the VAT adjusted.

Mistakes that get invoices sent back

• Missing or wrong TRN, on either side.
• Invoice numbers that repeat or jump between two sequences.
• VAT shown only in USD or another currency, with no AED amount.
• "Proforma" or "quote" used as the invoice the client pays against.
• One line for "services" on a large invoice, which the client's finance team can't match to a purchase order.

E-invoicing is coming

The UAE has announced a phased move to mandatory electronic invoicing, where invoices are exchanged in a structured format through accredited service providers rather than sent as PDFs. The largest businesses are scheduled to go first, with others following later. The timeline has been set by ministerial decision and may be updated, so check the Ministry of Finance e-invoicing page for the current dates before planning your system changes.

Corporate tax is separate

Corporate tax is a different regime from VAT, with its own registration and return. For most businesses it is 9% on taxable profit above AED 375,000. A free zone company may qualify for a 0% rate on qualifying income if it meets the conditions. Registering for one does not register you for the other.