New Cabinet Resolution Makes E-Invoicing Mandatory — Penalties Up to AED 5,000
The UAE Cabinet has given the green light to Resolution No. 106 of 2025, introducing fines for companies that don’t comply with the electronic invoicing system.
The move is part of a bigger push to digitize tax reporting, and businesses are being warned: get your systems ready, or the penalties will start adding up.
Officials say the goal is simple — make reporting more transparent and set the stage for a fully digital tax system ahead of the 2026 rollout.
Understanding the Legal Framework
The UAE Cabinet’s new resolution builds on existing rules and aligns with the broader push to digitize tax compliance. Knowing the framework helps businesses understand what’s expected and what’s coming next.
How Cabinet and Ministerial Rules Connect
Resolution No. 106 of 2025 strengthens the earlier Ministerial Decision No. 243 of 2025. It essentially gives the Cabinet’s backing to rules that were already in place, creating a solid legal framework for e-invoicing.
For businesses, the message is simple: systems need to be ready, processes must align with the rules, and penalties now carry real consequences. Compliance is no longer just bureaucratic — it’s predictable and enforceable.
Businesses in the Spotlight
Not every company is affected in the same way. VAT-registered businesses that handle B2B or B2G transactions must implement the e-invoicing system and appoint an Accredited Service Provider by the deadlines.
Larger businesses with annual revenue of AED 50 million or more face earlier compliance dates, while smaller firms have more time to prepare.
Other businesses, including those focused on B2C transactions or specific exempt sectors, are not immediately required to adopt the system.
Still, officials caution that now is the time to review processes.
Once the system goes live, there will be no shortcuts, and fines will begin accumulating quickly.
Administration of Penalties: What Businesses Face
The resolution clearly lays out the consequences for missing e-invoicing requirements. Here’s what businesses need to know:
- Companies that don’t implement the e-invoicing system or appoint an accredited service provider face a monthly fine of AED 5,000 until they comply.
- Every late electronic invoice carries a fine of AED 100, capped at AED 5,000 per month.
- Late electronic credit notes are also fined AED 100 each, with the same monthly cap.
- Failing to notify the FTA about system malfunctions can result in a daily penalty of AED 1,000.
- Companies that don’t update their registered data with the service provider face a daily fine of AED 1,000.
These fines aren’t just numbers — they represent real operational and financial risks if systems aren’t ready.
How Fines Affect Businesses
Getting ready for e-invoicing is more than just turning on software. Systems must work seamlessly, data needs to be accurate, and internal controls must be tight.
Equally important are the people running them — finance and operations teams must understand the rules, anticipate issues, and act quickly when problems arise. Strong processes and trained staff are what keep businesses ahead of fines and operational headaches.
Financial exposure is real. Even minor oversights can quickly turn into recurring monthly or daily fines, hitting the bottom line.
This is not a one-time adjustment. Companies that build strong processes now will navigate future digital tax rules more smoothly and avoid last-minute headaches.
Strategic Readiness for Taxpayers
Getting ready for e-invoicing is more than flipping a switch.
Companies need their systems to actually work—ERP software must integrate seamlessly with accredited service providers, and every function should be tested before penalties start stacking up.
Internal controls are non-negotiable. Companies need a solid plan for system downtime, accurate reporting, and catching mistakes before they turn into fines. Minor slip-ups can quickly become costly if left unaddressed.
Equally important are the people running the system. Finance and operations teams need to know the rules, grasp the risks, and act decisively when something goes wrong. Training isn’t just helpful—it’s what keeps a business ahead of trouble and running smoothly.
ADEPTS Helps Businesses Stay Compliant
For many businesses, switching to electronic invoicing can feel complicated. ADEPTS helps bridge that gap. The firm works with companies to establish compliant processes, understand VAT requirements, and prepare their systems to meet the new invoicing standards.
ADEPTS works directly with finance and operations teams to look at how things are done day to day. They ensure the ERP system supports the invoicing process and put stronger checks in place to prevent mistakes from slipping through.
For small and mid-sized businesses, this means the steps are more straightforward, errors are fewer, and moving to e-invoicing doesn’t feel like a minefield as the UAE shifts to fully digital tax reporting.
At the core of ADEPTS’ approach is readiness. The firm helps companies move into the e-invoicing framework with confidence, reduce risks, and gain a practical understanding of how the new rules will affect day-to-day operations.
Looking Ahead
Companies will need to keep an eye on the Federal Tax Authority. Clear instructions are coming, and they’ll show exactly how to follow the rules and avoid penalties. Those who pay attention now will have a much easier time when full compliance is enforced.
This isn’t happening in isolation. The UAE is also looking at how other countries handle digital tax systems.
E-invoicing is becoming the global norm, and the authorities here want to make sure local businesses aren’t left behind.
The aim is to make reporting less of a headache and the whole system more reliable.
Conclusion
The UAE isn’t giving businesses a grace period anymore. E-invoicing fines are real, and the clock is ticking. Companies that ignore systems, controls, or staff training are going to feel it.
But it’s not just about penalties. This is part of a bigger push — a step toward a fully digital tax system that matches what the rest of the world is doing. For businesses that get ahead of it, that’s a chance to streamline processes, reduce mistakes, and actually take control of how they handle compliance.
It’s a wake-up call. Stay ready, stay organized, and the transition doesn’t have to be painful.
FAQs:
Yes, sending PDFs is allowed, but the official e-invoice record must still be uploaded to the system on time. The PDF alone doesn’t fulfill compliance requirements.
Yes. Businesses remain responsible even if the downtime is on the ASP’s side. It’s important to have backup procedures and monitor the system closely.
Yes, any internal outage that prevents timely submission can trigger fines. Companies should plan for contingencies to avoid penalties.
It depends on the Free Zone and whether the entity is registered for VAT in the UAE. VAT-registered businesses generally fall under this rule, even in Free Zones.
No, invoices cannot simply be deleted. Corrections must be made via electronic credit or debit notes, in accordance with the e-invoicing procedures.
During the pilot, penalties may not be enforced immediately, but errors should still be avoided. It’s best to treat the pilot phase seriously to avoid future fines.
Yes, all mandatory adopters must follow e-invoicing rules for B2C transactions, including retail sales, unless specifically exempted.
Yes, VAT-registered foreign entities must appoint an Accredited Service Provider to comply with e-invoicing requirements.
The cap limits the total penalties for repeated errors within a month. Each invoice error is fined AED 100, but the sum cannot exceed AED 5,000 per month.
Changes such as business address, VAT registration details, or ASP information need to be updated with the FTA promptly to avoid daily fines.
References
- Accreditation of eInvoicing Service Providers.
https://mof.gov.ae/en/services/accreditation-of-e-invoicing-service-providers/. - Authority, Federal Tax. ‘Federal Tax Authority – United Arab Emirates’. Federal Tax Authority United Arab Emirates, https://tax.gov.ae//en/.
- Ministerial Decision No. 243 of 2025 on the Electronic Invoicing System.
https://mof.gov.ae/wp-content/uploads/2025/09/Ministerial-Decision-no.-243-of-2025-on-the-Electronic-Invoicing-System.pdf. - MoF Announces Issuance of Cabinet Resolution on Administrative Fines on Electronic Invoicing System.
https://www.wam.ae/en/article/bn3zh6y-mof-announces-issuance-cabinet-resolution. - The National Digital Accessibility Policy.
https://uaelegislation.gov.ae/en/policy/details/the-national-digital-accessibility-policy. - What Is an eInvoice? https://mof.gov.ae/en/about-ministry/mof-initiatives/einvoicing/.
