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UAE eInvoicing for non-VAT-registered businesses
Take a small design studio that earns AED 300,000 a year, all of it from other businesses. It is below the VAT registration threshold, so it has never registered for VAT. Its invoices are simple PDFs sent by email.
From 1 July 2027, that studio will need to send those invoices as eInvoices. An eInvoice is a structured data file. It is exchanged through an Accredited Service Provider (ASP), a company approved by the Ministry of Finance (MoF), and its tax data is reported to the Federal Tax Authority (FTA). The studio's lack of a VAT registration does not change this.
The reason is in the MoF's Electronic Invoicing Guidelines v1.1. They put every person that makes a business transaction in the UAE in scope, "notwithstanding their VAT registration status." This guide explains which businesses without a VAT registration are covered, the invoice they issue, how they get the identifier they need and when their deadline falls.
Three separate questions: VAT registration depends on your taxable supplies. eInvoicing scope depends on whether you make business transactions in the UAE. Your eInvoicing deadline depends on your gross income. The answer to one does not decide the other two.
Which businesses without VAT registration does UAE eInvoicing cover?
The FTA requires VAT registration when taxable supplies and imports pass AED 375,000 over the previous 12 months, or are expected to pass it within 30 days. Voluntary registration is possible from AED 187,500. Many businesses sit outside VAT for one of these reasons, and each can still be in scope for eInvoicing:
• Below the VAT threshold. A small business that bills other businesses is in scope for those invoices, even with no VAT registration.
• Only VAT-exempt supplies. Exempt supplies do not count towards the VAT threshold. According to PwC, these include certain financial services, residential property after its first supply, bare land and local passenger transport. A business earning only this kind of income has no VAT registration, however large it is.
• Deregistered from VAT. Leaving VAT does not end your business transactions. Your eInvoicing scope is checked on what you do now.
• Newly formed. A new company comes into scope from its first business transaction, whatever its VAT position.
Scope also covers the buying side. Under Article 5 of Ministerial Decision No. 243 of 2025, both the issuer and the recipient of an invoice must appoint an ASP. A business that only buys from other businesses still needs an ASP to receive its suppliers' eInvoices.
One group falls outside this guide. Members of a VAT group are VAT-registered through the group, even though the group files under one representative.
Does being VAT-exempt mean you are exempt from eInvoicing?
No. VAT exemption and eInvoicing exclusion are two different rules. The eInvoicing exclusions are much narrower:
• Sales to, or purchases from, private individuals who are not in business (B2C).
• Government activity carried out in a sovereign capacity and not in competition with private businesses.
• Airline passenger transport where an electronic ticket is issued, and related passenger services.
• Financial services that are exempt from VAT under Article 42 of the VAT Executive Regulation.
Only the last of these lines up with a VAT exemption. Local passenger transport, for example, is exempt from VAT but not excluded from eInvoicing. A bus or taxi company that bills corporate customers issues eInvoices for those sales.
Each exclusion applies to a type of transaction. A business can be out of scope for its sales to individuals and in scope for its sales to companies at the same time. Our guide to UAE eInvoicing scope and exemptions sets out every exclusion in full.
Which invoice does a non-VAT-registered business issue?
A VAT-registered business making a taxable sale issues a Tax Invoice. The Guidelines define a second document, the Commercial Invoice, for "any sales that do not require a Tax Invoice under the VAT Decree-Law." That covers three situations: an exempt supply, a supply outside the scope of VAT, and any supply by a business that is not registered for VAT.
A Commercial Invoice is a separate document type with its own codes. It is not a simpler or optional version of a Tax Invoice.
| Tax Invoice | Commercial Invoice |
Used for | Standard-rated and zero-rated sales by a VAT-registered business | Exempt sales, sales outside VAT, and all sales by a business without VAT registration |
TRN on the invoice | Required | Not required. A seller without a TRN gives its TIN |
Document type code | 380 | 480 |
Credit note and its code | Tax Credit Note, 381 | Electronic Credit Note, 81 |
Can the buyer self-bill? | Yes, under the VAT self-billing conditions | No |
How it is exchanged | Through ASPs on the Peppol network, reported to the FTA | The same way |
Peppol is the international network that carries eInvoices between service providers. The format on that network is PINT AE, the UAE version of the Peppol International (PINT) invoice specification. Your ASP handles both, whichever invoice type you issue.
Can a customer self-bill a non-VAT-registered supplier?
No. Self-billing means the buyer issues the invoice on the supplier's behalf. Section 10.3 of the Guidelines allows it only under the VAT self-billing conditions and states: "there is no option for self-billing of Commercial Invoices."
If a customer issues invoices on your behalf today, agree with them before your go-live date that you will issue your own Commercial Invoices. Our guide to UAE eInvoicing self-billing covers how these arrangements work for VAT-registered suppliers.
How does a business without a VAT registration get a TIN?
Every eInvoice travels to a Participant Identifier, which is your address on the Peppol network. It is built from your Tax Identification Number (TIN).
Your TIN is the first 10 digits of any Tax Registration Number (TRN) the FTA has issued to you. The TRN can come from VAT, Corporate Tax or another tax. So a business registered for Corporate Tax already has a TIN, even with no VAT registration.
A business with no FTA registration of any kind generates a TIN through EmaraTax, the FTA's online portal. Your ASP then creates your Participant Identifier: 0235 followed by your 10-digit TIN. Getting a TIN this way is not a VAT registration and does not change your VAT position. Our guide to EmaraTax onboarding walks through each step.
When does a non-VAT-registered business have to start?
Your deadline depends on your gross income, not on your VAT status.
Gross income in your most recent accounting period | Appoint an ASP by | Mandatory from |
AED 50 million or more (Phase 1) | 30 October 2026 | 1 January 2027 |
Below AED 50 million (Phase 2) | 31 March 2027 | 1 July 2027 |
The Guidelines measure "Revenue" as gross income from financial statements prepared under UAE law. A newer business without financial statements can use "other documentation acceptable to the FTA." Any business can also start voluntarily before its phase.
Most businesses without a VAT registration are small, so most are in Phase 2. But a large business can be in Phase 1 with no VAT registration at all. Take a company that rents residential buildings to employers as staff housing. Most residential leases are exempt from VAT, so it may have no VAT registration. If its gross income is AED 50 million or more, its leases to those employers fall under Phase 1.
Do the same penalties apply without a VAT registration?
Yes. Cabinet Decision No. 106 of 2025 sets the eInvoicing penalties by type of violation, not by VAT status. They include:
• AED 5,000 for each month you fail to implement the system or appoint an ASP on time.
• AED 100 for each eInvoice not issued or sent on time, up to AED 5,000 a month.
• AED 100 for each electronic credit note not issued or sent on time, up to AED 5,000 a month.
Businesses that join voluntarily are not fined until their mandatory date arrives.
How do the rules work out for three different businesses?
Business | VAT position | eInvoicing position |
A design studio earning AED 300,000 a year from other businesses | Not registered, below the threshold | In scope for its invoices. Phase 2 |
A company earning AED 60 million a year from renting staff housing to employers | Not registered, because its income is VAT-exempt | In scope for its leases to employers. Phase 1 |
A new holding company that only receives dividends | Not registered | Out of scope until it has business transactions, such as recharging management costs |
What should a non-VAT-registered business check first?
List who you invoice and who invoices you. Are any of these business transactions in the UAE? Both selling and buying count.
Set aside the excluded transactions, such as sales to private individuals. Check each type of sale separately.
Find your gross income for your most recent accounting period and compare it with AED 50 million.
Check whether you already hold a TRN from any FTA registration. If not, plan to generate a TIN through EmaraTax.
Review any self-billing arrangements with customers and agree when they will end.
Appoint an ASP well before your deadline and test both sending and receiving.
How can Zoho Books help a business without a VAT registration?
A business does not need a VAT registration to start preparing for eInvoicing. Zoho is an Accredited Service Provider on the Ministry of Finance's register, and Zoho Books is its accounting software for UAE businesses.
Explore UAE eInvoicing with Zoho Books
Frequently asked questions
Does getting a TIN for eInvoicing mean I have to register for VAT?
No. A TIN generated through EmaraTax is a separate registration. It does not change whether you meet the VAT registration threshold.
Can I keep sending PDF invoices?
Until your mandatory date, yes. From that date, your invoices to other businesses must be issued and exchanged as eInvoices through your ASP. A PDF on its own no longer counts.
What happens if my business registers for VAT later?
Your taxable sales then move from Commercial Invoices to Tax Invoices, which carry your TRN. Tell your ASP about the change. Appendix 3 of the Guidelines asks businesses to keep their ASP updated when their tax circumstances change.
Does a sole trader without a VAT registration need eInvoicing?
Yes, when the sole trader invoices other businesses in the course of their work. The Guidelines treat a natural person carrying on a business in the same way as a company.
Does a Free Zone business without a VAT registration need eInvoicing?
Yes. Free Zone status does not create an exemption, and neither does the lack of a VAT registration. See our guide to eInvoicing for Free Zone and Designated Zone businesses for the extra invoice details that Free Zone sales can need.
Related guides
• UAE eInvoicing scope, exemptions and the AED 50 million threshold
• UAE eInvoicing onboarding through EmaraTax: steps and identifiers
• UAE eInvoicing credit notes: rules for correcting an Electronic Invoice