Credit Notes in the UAE: Format and VAT Rules
When to issue a tax credit note in the UAE, what it must show, the 14-day rule, and how it differs from a debit note.
General information, not tax advice
This guide explains UAE tax credit notes in plain English. It is not tax advice, and VAT rules change. Confirm your obligations with the Federal Tax Authority (FTA) or a registered tax agent before you rely on it.
What a credit note is
A credit note reduces the amount on an invoice you have already issued. Instead of editing or deleting the original invoice, you issue a separate document that records the change and refers back to it.
Under UAE VAT, a VAT-registered supplier who issued a tax invoice and then reduces the value of that supply issues a tax credit note. It corrects the VAT you reported, and lets your customer correct the input tax they recovered.
When you need to issue one
- The customer returns goods, or you cancel a service you already invoiced.
- You give a discount, rebate or price reduction after the invoice was issued.
- You overcharged by mistake, for example a wrong quantity or unit price.
- You charged VAT on a supply that should have been zero-rated or exempt.
What a UAE tax credit note must show
The VAT Executive Regulation (Article 60) lists the details. In practice that means:
- The words "Tax Credit Note" clearly displayed.
- Your name, address and Tax Registration Number (TRN).
- The customer's name and address, and their TRN if they are VAT-registered.
- The date the credit note is issued, and its own unique number.
- A reference to the original tax invoice (its number and date).
- The value shown on the original invoice, the corrected value, the difference, and the VAT on that difference, in UAE dirhams (AED).
- A short explanation of why the credit note is being issued.
The 14-day rule
A tax credit note should be issued within 14 days of the event that causes the adjustment, such as the date goods are returned or a discount is agreed. The same 14-day window applies to tax invoices after a supply. Issue the credit note promptly so both sides can report the change in the right VAT return.
A worked example
You invoiced a client AED 10,000 plus AED 500 VAT (total AED 10,500). They return a quarter of the goods. Your credit note shows:
- Original value: AED 10,000
- Corrected value: AED 7,500
- Difference: AED 2,500
- VAT on the difference (5%): AED 125
- Total credited: AED 2,625
You reduce your output VAT by AED 125 in your return, and your client reduces their input tax by the same amount. Our VAT calculator can work out the VAT on any difference.
Credit note vs debit note
A credit note reduces what the customer owes. A debit note increases it, for example when you undercharged.
UAE VAT law doesn't define a "tax debit note". If the value of a supply goes up, the supplier normally issues a further tax invoice for the extra amount and VAT. A document called a debit note still needs all the details of a tax invoice. See our UAE VAT invoice guide for that list.
Making a credit note with Taskmoro
In the invoice generator, choose Custom as the document title and type "Tax Credit Note". Give it its own number, mention the original invoice number and date in the notes, and enter the amount being credited with 5% VAT.
Credit notes and UAE e-Invoicing
Once a business is in the UAE e-Invoicing system, its credit notes must be issued as structured electronic credit notes through an Accredited Service Provider, just like its invoices. A PDF credit note will not meet that requirement. Read our UAE e-Invoicing guide for the rollout dates.
Common mistakes
- Editing or deleting the original invoice instead of issuing a credit note.
- Leaving out the original invoice number, so the adjustment can't be traced.
- Showing only the new total, without the difference and the VAT on it.
- Issuing a credit note for a supply that was never invoiced.
- Waiting weeks to issue it, so it lands in the wrong VAT return.