UAE Revises E-Invoicing Penalty Framework Following First Service Provider Appointment Deadline

According to BSA LAW tax partner Shamma Al Falahi writing for MEP Middle East, businesses in the UAE with annual revenues of AED 50 million or more reached their mandatory deadline on 30 October 2026 to appoint an Accredited Service Provider (ASP). The requirement serves as the initial statutory step under Ministerial Decision No. 244 of 2025, as amended by Ministerial Decision No. 66 of 2026, leading up to mandatory full system implementation on 1 January 2027.

On the same date, the Ministry of Finance announced Cabinet Decision No. 173 of 2026, which repeals and replaces Cabinet Decision No. 106 of 2025 to govern administrative violations and penalties under the Electronic Invoicing System. Under the new rules, failing to meet implementation obligations—including the timely appointment of an ASP—carries an initial penalty of AED 5,000, followed by an additional AED 5,000 for each month or partial month of non-compliance, capped at AED 50,000 across any 12 consecutive months.

The revised decree also stipulates that when a single entity acts as both issuer and recipient with respect to the same violation, only one penalty is imposed. Additionally, under amended Article 6(5), issuers not subject to the VAT Law invoicing timeline are required to issue and transmit invoices within 14 business days of the transaction, rather than 14 calendar days.

The analysis also notes that Article 12, which previously required businesses to notify the Federal Tax Authority of a system failure within two business days, has been repealed and its related penalties removed. However, businesses remain legally responsible for fulfilling electronic invoicing obligations when technical failures arise.