Key takeaways
- Cabinet Decision No. 173 of 2026 is the new e-invoicing penalty regime. It repeals Cabinet Decision No. 106 of 2025.
- Failing to implement e-invoicing, including failing to appoint an Accredited Service Provider (ASP), costs AED 5,000, then AED 5,000 for each further month, capped at AED 50,000 in any 12 months.
- From 1 October 2026, e-invoices and e-credit notes must be issued and transmitted within 14 business days of the transaction.
- Transactions inside a VAT tax group are excluded from e-invoicing for 24 months from 1 January 2027.
The UAE has rewritten the rulebook that sits behind e-invoicing. Two new instruments from the Ministry of Finance change how penalties are calculated and when an e-invoice must be sent, and they arrive just as the largest businesses prepare to go live on 1 January 2027. This article explains what changed, who is affected and what to do before your go-live date.
What has changed
There are two new pieces of legislation to know about.
- Cabinet Decision No. 173 of 2026 sets out the violations and administrative penalties under the e-invoicing legislation. It replaces Cabinet Decision No. 106 of 2025 and takes effect the day after it is published in the Official Gazette.
- Ministerial Decision No. 197 of 2026 amends Ministerial Decision No. 243 of 2025, which defines the scope of the e-invoicing system. It has applied since 1 October 2026.
The implementation timetable itself has not moved. Businesses with revenue of AED 50 million or more had to appoint an ASP by 30 October 2026 and must go live on 1 January 2027. Businesses below AED 50 million must appoint an ASP by 31 March 2027 and go live on 1 July 2027. Government entities follow on 1 October 2027. Revenue is measured on the most recent accounting period.
The new e-invoicing penalties
Cabinet Decision No. 173 of 2026 lists four violations.
| Violation | Penalty |
|---|---|
| Failing to implement e-invoicing on time, including failing to appoint an ASP; or a recipient that has implemented it failing to keep complying | AED 5,000 for the first violation, plus AED 5,000 for each month or part month it continues; capped at AED 50,000 in any 12 consecutive months |
| Failing to issue and transmit an e-invoice | AED 100 per invoice, up to AED 5,000 per calendar month |
| Failing to issue and transmit an e-credit note | AED 100 per credit note, up to AED 5,000 per calendar month |
| Failing to tell your ASP about changes to the data registered with the FTA | AED 250 per day of delay, up to AED 5,000 per calendar month |
Three points in the decision matter in practice:
- The monthly charge is capped. On the decision’s formula, a business that misses its deadline and stays non-compliant for nine further months reaches the AED 50,000 ceiling for that 12-month window. The cap limits the cost, but it does not remove the obligation.
- One penalty, not two. Where the same person is both issuer and recipient for the same violation, only one penalty applies.
- Voluntary users are outside the regime. Businesses that adopted e-invoicing voluntarily, before their mandatory date, are not caught by these penalties.
The capped invoice and credit note penalties also mean that a single badly configured billing run will not create unlimited exposure. Repeated failures across several months will still add up, so they need fixing at source.
The 14-business-day rule
Ministerial Decision No. 197 of 2026 sets a firm timing rule: an e-invoice or e-credit note must be issued and transmitted within 14 business days of the transaction date.
For most businesses that bill as they deliver, this is easy to meet. The risk sits with:
- month-end or quarterly billing cycles that batch several weeks of supplies;
- credit notes raised manually after a customer dispute;
- branches or entities that invoice outside the main ERP; and
- project businesses that invoice on milestone sign-off rather than on delivery.
If any of these apply, map the gap between the transaction date and the invoice date now. A late e-invoice could fall within the AED 100 per invoice penalty above.
Tax groups and other exclusions
The amended scope rules exclude the following from the e-invoicing system:
- transactions between members of a VAT tax group, for 24 months from 1 January 2027;
- government entities acting in a sovereign capacity that do not compete with the private sector;
- international passenger air transport issued with e-tickets, and related ancillary services;
- international air cargo documented by air waybills, for 24 months from the date the system takes effect;
- exempt or zero-rated financial services under Article 42 of the VAT Executive Regulation; and
- other transactions the Minister of Finance may exclude.
The tax group relief is useful for groups with heavy intercompany recharges, such as management fees and shared service costs. It is temporary, so intercompany invoicing should still be built into your plan for 2029. Supplies from group members to third parties remain in scope.
The decision also confirms that e-invoice records must be kept as the Tax Procedures Law requires and produced to the FTA on request. Your ASP transmits the data, but record keeping stays with you.
Who is affected
- Businesses with revenue of AED 50 million or more that have not yet appointed an ASP. The FTA has already reminded this group that monthly penalties apply to late appointment.
- All in-scope businesses preparing for go-live, because the 14-business-day rule and the data-change obligation apply from day one.
- VAT groups, which can now plan intercompany flows around the 24-month exclusion.
- Smaller businesses below AED 50 million, which have until 31 March 2027 to appoint an ASP.
What to do now
- Confirm your phase per entity. Measure revenue on the most recent accounting period for each legal entity, not the group.
- Appoint an ASP if you are late. Each month or part month adds AED 5,000 until you comply or reach the cap. Keep a dated record of your steps.
- Test your billing calendar against 14 business days. Change batch billing and manual credit note processes that would miss it.
- Assign ownership of data changes. A change of trade name, address or TRN details must reach your ASP quickly, or daily penalties start.
- Review intercompany flows. Identify which transactions fall within the tax group exclusion and which do not.
Our UAE e-invoicing implementation services cover ASP onboarding, billing process changes and go-live testing. For the full timeline and system requirements, see our guide to UAE e-invoicing after the 30 October ASP deadline, or start with an e-invoicing readiness assessment.
Frequently asked questions
What is the maximum penalty for not appointing an ASP?
Under Cabinet Decision No. 173 of 2026, AED 5,000 for the first violation and AED 5,000 for each further month or part month, capped at AED 50,000 in any 12 consecutive months.
How quickly must an e-invoice be sent?
Within 14 business days of the transaction date, under Ministerial Decision No. 197 of 2026. The same rule applies to e-credit notes.
Do intercompany invoices inside a VAT group need to be e-invoices?
Not for 24 months from 1 January 2027. Transactions within a tax group are excluded for that period.
We adopted e-invoicing voluntarily. Can we be penalised?
The penalty decision does not apply to persons using e-invoicing voluntarily. Once your mandatory date arrives, the penalties apply in full.
Has the go-live date changed?
No. Businesses with revenue of AED 50 million or more go live on 1 January 2027; smaller businesses on 1 July 2027.
Talk to Aabi
Aabi Chartered Accountants has 40+ qualified professionals across the group and more than 1,500 clients. We can check your phase, appoint and onboard an ASP, and align your billing with the new rules before your go-live date. Book a free consultation or call +971 56 633 0093.
Official sources
- Ministry of Finance, Cabinet Decision No. 173 of 2026 on e-invoicing violations and administrative penalties
- Ministry of Finance, Ministerial Decision No. 197 of 2026 amending Ministerial Decision No. 243 of 2025
- Ministry of Finance, Ministerial Decision No. 244 of 2025 on implementation of the e-invoicing system
- Ministry of Finance, Ministerial Decision No. 66 of 2026 (ASP deadline moved to 30 October 2026)
- Federal Tax Authority, FTA calls on persons subject to e-invoicing to meet legal deadlines (25 October 2026)
- Ministry of Finance, UAE e-invoicing initiative
This article reflects the position as at November 2026 and is general guidance. Confirm your specific obligations before acting.