With value added tax (VAT) coming into effect from today, the face of invoices or bills that usually exchange hands between seller and buyer will change. This change is not limited to the inclusion of VAT at five per cent on the invoice; many other elements also need to be incorporated in invoices in line with Article 59 of Executive Regulations of the VAT Law.
As per the law, invoices should not display “invoice” or “bill”; rather, “tax invoice” should be clearly displayed on it. Also, the tax registration number (TRN) issued to the supplier or seller should also find a place on invoices along with addresses.
Buyer details on an invoice, which used to be name and address earlier, will now have another companion – the TRN of the buyer. So, a registered buyer needs to ensure that his or her TRN is provided to the seller, and the seller mentions the same on the invoice. The invoice number will continue to appear on invoices, as was in the pre-VAT era.
But now, during the VAT era, a seller needs to ensure that these invoice numbers are sequentially mentioned, so that no number is missing or untraceable.
The invoice date will also carry forward its legacy of appearing on invoices. But now, it will be accompanied by the goods supply date. However, the goods supply date needs to be mentioned on the invoice only if the date of supply and invoicing is different. If both dates are the same, the goods supply date can be skipped.
The rate of tax is a new entrant into the invoice format along with quantity, unit price and amount for each description of goods or services being supplied. Also, the amount needs to be mentioned in dirhams. Regulations state that the rate of tax has to be displayed for each line item and not at the total level. So if sellers were planning to sum the invoice amount and then charge five per cent VAT on the same, they need to rethink to transform their invoice. In case a seller is providing any discounts, the same should also be mentioned on the tax invoice in order to provide clarity of computation of VAT. The amount payable should also be displayed, along with the VAT amount.
Based on the above, a sample format of a tax invoice appears could appear like that on the right.
The format is only a sample based on Article 59 of Executive Regulations of the VAT Law. The seller can design its own tax invoice format based on his or her requirement, but needs to ensure all the above information finds its place on the tax invoice. Like if seller wants to display the VAT amount or discount amount against each line, he or she is permitted to do so.
Also, there is a provision to issue a simplified tax invoice on fulfillment of certain conditions. In any case, suppliers or sellers should start looking at their invoice and accommodate the necessary changes in line with the law.