The UAE Ministry of Finance has issued a new Cabinet decision overhauling the penalty structure for its mandatory e-invoicing system, replacing Cabinet Decision No. 106 of 2025 after businesses complained the original fines were too severe.
Under the revised framework, a first violation involving the issuance or receipt of an e-invoice will carry a Dh5,000 fine, with an additional Dh5,000 added for every further month a company remains non-compliant. Crucially, the total penalty a business can face within any 12-month period is now capped at Dh50,000, giving companies much more certainty over their maximum exposure compared with the open-ended system first proposed.
The update also scraps a separate penalty that previously applied when companies failed to notify authorities about system failures affecting their e-invoicing platforms. Officials said removing that clause was meant to ensure penalties "are applied more appropriately" rather than punishing firms for technical outages beyond their control.
The rules apply to both issuers and recipients of e-invoices. Notably, where the same company acts as both issuer and recipient in a single violation, only one penalty will now be charged rather than two, closing a loophole that businesses said unfairly double-counted identical infractions.
Officials framed the changes as an attempt to give companies "greater certainty" and reduce administrative burden while keeping the integrity of the e-invoicing system intact ahead of full rollout. Businesses with annual revenue of Dh50 million or more were required to appoint an accredited service provider by the end of October, with mandatory e-invoicing implementation taking effect from January 2027. Tax advisers say the lighter penalty regime should make the transition less costly for mid-sized firms still adapting their accounting systems to the new digital requirements.