The UAE Ministry of Finance has issued Cabinet Decision No. 106 of 2025, which sets out violations and administrative penalties related to the national e-invoicing system. The decision takes effect the day after its publication in the Official Gazette, making compliance an immediate priority for businesses operating in the UAE.
In simple words, this decision moves e-invoicing from a regulatory requirement to an enforceable obligation, with defined penalties for non-compliance.
This article explains what the decision covers, who it applies to, and most importantly, what businesses need to do now.
What Is Cabinet Decision No. 106 of 2025 About?
Cabinet Decision No. 106 of 2025 defines violations and penalties linked to the UAE e-invoicing system introduced under Federal Decree-Law No. 28 of 2022.
Its purpose is to ensure that businesses:
- Implement the e-invoicing system on time
- Use approved technical channels
- Issue and receive invoices correctly
- Report system issues without delay
The decision provides legal clarity and sets financial consequences for failures on both the issuing and receiving sides.
Who Does the Decision Apply To?
The decision applies to all entities involved in:
- Issuing electronic invoices
- Transmitting electronic invoices
- Receiving electronic invoices
- Issuing or receiving electronic credit notes
If a business is subject to Federal Decree-Law No. 28 of 2022, this decision applies to it, regardless of size or industry.
What this really means is that even businesses with limited transaction volumes are not exempt from compliance obligations.
Key Definitions You Should Understand
To avoid confusion, the decision clearly defines important terms used in the e-invoicing framework.
Key definitions include:
● Electronic Invoice
A structured digital invoice is issued, transmitted, and received through the UAE e-invoicing system.
● Electronic Credit Note
A structured electronic document used to adjust or correct an issued electronic invoice.
● Issuer
The entity responsible for issuing the electronic invoice or credit note.
● Recipient
The entity that receives the electronic invoice or credit note.
● Accredited Service Provider (ASP)
A service provider approved by the Authority to facilitate e-invoicing.
Understanding these roles is essential because penalties are assigned based on whether a business acts as an Issuer or a Recipient.
What Are the Penalties for Issuers?
Issuers carry primary responsibility for issuing and transmitting invoices correctly and on time. The decision lists specific violations with defined penalties.
Penalties applicable to Issuers include:
- Failure to implement the e-invoicing system or appoint an Accredited Service Provider within the prescribed timeline
Penalty: AED 5,000 for each month or part of a month of delay
- Failure to issue and transmit an electronic invoice within the prescribed timeline
Penalty: AED 100 per invoice, capped at AED 5,000 per calendar month
- Failure to issue and transmit an electronic credit note within the prescribed timeline
Penalty: AED 100 per credit note, capped at AED 5,000 per calendar month
- Failure to notify the Authority of a system failure within the prescribed timeline
Penalty: AED 1,000 for each day of delay or part thereof
- Failure to notify the appointed ASP of changes to registered data within the prescribed timeline
Penalty: AED 1,000 for each day of delay or part thereof
The structure of these penalties shows a clear focus on ongoing compliance rather than one-time enforcement.
What Are the Penalties for Recipients?
Recipients also have defined responsibilities under the e-invoicing framework. The decision makes it clear that compliance is not limited to invoice issuers.
Penalties applicable to Recipients include:
- Failure to notify the Authority of a system failure within the prescribed timeline
Penalty: AED 1,000 for each day of delay or part thereof
- Failure to notify the appointed ASP of changes to registered data within the prescribed timeline
Penalty: AED 1,000 for each day of delay or part thereof
This confirms that recipients must actively monitor their systems and maintain accurate registration details.
What Should Businesses Do to Avoid Penalties?
To stay compliant under Cabinet Decision No. 106 of 2025, businesses should focus on operational readiness rather than last-minute fixes.
Key steps include:
- Confirming the timely appointment of an Accredited Service Provider
- Ensuring invoicing systems can issue and transmit invoices within the required timelines
- Setting internal alerts for system failures
- Defining clear reporting responsibilities
- Regularly reviewing and updating registered business data
- Training finance and IT teams on compliance procedures
The thing is, most penalties arise not from intent but from weak processes and unclear ownership.
Why This Decision Matters for Long-Term Compliance
This decision signals a shift toward structured enforcement of digital tax and reporting systems in the UAE. E-invoicing is part of a broader framework that includes VAT compliance, data standardisation, and transaction transparency.
Businesses that align early will face fewer disruptions, lower compliance risk, and better audit readiness.
Those who delay may face recurring penalties that accumulate quietly over time.
To sum up, Cabinet Decision No. 106 of 2025 brings clarity, accountability, and enforceable standards to the UAE e-invoicing system. The expectations are now clearly defined, and the penalties are practical and measurable.
For businesses, the priority is simple. Understand your role, fix your processes, and monitor compliance continuously.
Staying ahead of regulatory change requires more than just technical readiness. It requires the right guidance and clear interpretation along with practical implementation. Working with experienced advisors such as Kreston Menon helps businesses deal with evolving compliance requirements with confidence and stay prepared for what comes next.