The UAE's Ministry of Finance has rolled out amendments to its e-invoicing system that applies to value-added tax filing in the country from next year.
The amendments introduce a temporary exclusion for business transactions between entities that are members of the same tax group for two years, starting from January 1, 2027, the Ministry of Finance said in a statement on Monday.
Such transactions will be treated as "excluded transactions" throughout the 24-month period, "giving businesses greater flexibility and more time to adapt to the system", the ministry said.
The move is "welcome", but more clarity will be needed to understand specific details, said David Daly, partner at Gulf Tax Accounting Group.
For instance, in a scenario where each entity also issues invoices to non-tax group members, it still needs to be known whether these must be managed through the e-invoicing system, he said.
The ministry's latest decision also amends article 11 on the storage of electronic invoice and electronic credit note data.
Under the amended provision, entities must retain all electronic invoices, electronic credit notes and any associated data for the period prescribed under the Tax Procedures Law, and ensure that such records can be provided to the Federal Tax Authority upon request, the ministry said.
The decision "removes the previous requirement that such data be stored within the UAE, thereby shifting the focus from the location of storage to the retention and accessibility of records for tax compliance purposes", it added.
The amendments also remove the requirement for companies to notify the FTA of a system failure within two business days of it happening.
The ministry said the amendments are aimed at "facilitating the ease of doing business in the UAE by reducing operational burdens on businesses, providing greater flexibility during the implementation of the electronic invoicing system, and ensuring that regulatory requirements support an efficient and business-friendly environment".
The latest decision comes as the first major compliance requirement in the UAE's phased transition to e-invoicing approaches on October 30.
The ministry extended the deadline for appointing an accredited service provider (ASP) for businesses in the UAE with annual revenue of Dh50 million ($13.6 million) or more to October 30 from July 1 under phase 1 of the programme.
Under the UAE's unified e-invoicing model, all qualifying transactions must be validated and sent through an ASP.