Lesson 5 — Exclusions and penalties
Two questions people ask in the same breath: does this apply to me at all, and what does it cost if I am late?
Start with what sits outside. MD 243/2025 Art. 4 excludes these from the electronic invoicing system:
- Government sovereign activities.
- International airline passenger services issued with an electronic ticket.
- Ancillary passenger services supplied by airlines.
- International airline cargo, excluded for 24 months from implementation.
- Financial services that are exempt from VAT or zero-rated.
Read that as a list of activities rather than a list of businesses — the exclusions attach to what is being supplied. And note that the cargo item carries its own clock: 24 months from implementation, after which it stops being excluded. Source: MD 243/2025 Art. 4.
B2C is out of scope for now, and "for now" is doing real work in that sentence. MD 244 Art. 5(2) keeps business-to-consumer transactions outside the system until a further Ministerial decision brings them in. Design your process so that adding B2C later is a configuration change rather than a second project. Source: MD 244/2025 Art. 5(2).
Now the cost of being late. Cabinet Decision 106 of 2025, issued in December 2025, sets the administrative penalties for the electronic invoicing system.
| Failure | Penalty |
|---|---|
| Failure to implement the system, or to appoint an ASP | AED 5,000 for each month of delay |
| Failure to issue or transmit an e-invoice or e-credit note | AED 100 per document, capped at AED 5,000 per month |
| Failure to notify a system failure, or a change in data | AED 1,000 per day |
The arithmetic, in three short cases. A Phase 1 business that appoints its provider three months late owes AED 15,000, being 3 × 5,000. A business that fails to transmit 80 documents in one month owes 80 × 100 = AED 8,000, capped at AED 5,000; the cap bites at 50 documents, so past fifty the monthly figure stops rising even though the underlying problem does not. A system failure left unreported for 12 days costs 12 × 1,000 = AED 12,000 — more than either of the others, from a notification nobody remembered to send. Source: Cabinet Decision 106/2025.
Voluntary adopters are excluded from these penalties. That is the strongest argument for joining early rather than waiting for your phase to arrive. A business that starts in the voluntary window learns the process, finds its data gaps and settles its provider integration with the penalty regime switched off. A business that starts on the first day of its own phase does all of that live.
The misreading to avoid is that an exclusion from e-invoicing is not an exclusion from anything else — not from VAT, not from record-keeping, not from Corporate Tax. A business supplying exempt financial services still carries every other obligation it carried last year. In the same spirit, "not yet dated" for Phase 4 means a date that has not been published, not a phase that will not happen.
The idea to carry forward: the cheapest month in which to make your mistakes is a month where penalties do not apply, and that window is open now.