What a VAT invoice from a UAE agency should show

The first invoice from a marketing agency is a useful test. It shows whether the agency's paperwork matches what it promised in the contract, and it is the document you will rely on later if you are VAT registered and want to recover tax. The UAE Federal Tax Authority publishes a guide that says what a tax invoice must contain, so you can check it line by line. This is general information, not tax or legal advice, so ask your adviser about your own position.

Does your agency have to charge VAT?

Only if it is in the VAT system, or chooses to be. The Authority states that the mandatory registration threshold is AED 375,000 and the voluntary threshold is AED 187,500, measured on taxable supplies and imports over the previous 12 months or expected in the next 30 days. So a small supplier may not charge VAT, and a larger one should. Ask which applies before you compare quotes, and make sure the contract says whether the fee includes VAT.

What a full tax invoice shows

The Authority's 2022 guide on tax invoices lists the details of a standard full tax invoice. Among them:

• The words "tax invoice" clearly displayed.
• A sequential or unique invoice number.
• The date of issue, and the date of supply if it is different.
• The name, address and tax registration number of the supplier.
• Your name and address, with your registration number if you are registered.
• A description of the services, and for each one the quantity, the VAT rate and the amount payable in dirhams.
• The total amount of VAT in dirhams.

When it should arrive

The same guide says a tax invoice must be issued and delivered within 14 calendar days from the date of every taxable supply. If your retainer bills monthly, put the invoice date in the contract and check the first one against it.

When a simpler invoice is allowed

A supplier may issue a simplified tax invoice if the customer is not registered for VAT, or if the customer is registered and the VAT-inclusive price is AED 10,000 or less. A simplified invoice has fewer details, but still carries the words "tax invoice", the supplier's name, address and registration number, the date, a description and the total with the VAT charged.

Two practical points

If the agency bills in another currency, the guide says the amounts must be converted into dirhams using an exchange rate approved by the Central Bank. If there is an error, it should be corrected through a tax credit note or an additional tax invoice.

The guide is dated 2022, so check the Authority's current guidance. For the wider reading of an agency contract, see what an agency contract in the UAE should say and common mistakes with agency fees, VAT and invoices. To score the VAT questions against a real contract, use the agency contract checklist.

A disclosure

This site is published by Web Marketing International FZCO, which sells advertising management. If an invoice or a contract term from me is unclear, you can ask me about it, and you should check my invoices against the same list.