Self Billing Agreement Template for the United Arab Emirates
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What is a Self Billing Agreement?
The Self Billing Agreement Template is designed for use in the United Arab Emirates where businesses wish to implement a self-billing arrangement in compliance with UAE VAT legislation and commercial laws. This document is particularly useful in situations where a customer regularly receives goods or services from a supplier and agrees to generate tax invoices on the supplier's behalf, streamlining the invoicing process and reducing administrative burden. The template includes comprehensive provisions addressing UAE VAT compliance requirements, electronic invoicing standards, and necessary safeguards for both parties. It is structured to accommodate various business relationships while ensuring adherence to UAE Federal Tax Authority guidelines and local regulatory requirements.
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Frequently Asked Questions
Is a self billing agreement legally binding under UAE VAT law?
Yes, a properly executed self billing agreement is legally binding in the UAE under Federal Decree-Law No. 8 of 2017 on Value Added Tax. The agreement must comply with UAE Federal Tax Authority requirements and include all mandatory provisions such as VAT registration numbers, invoice generation procedures, and record-keeping obligations. Both parties are legally bound to follow the terms once signed.
Can the UAE Federal Tax Authority reject my self billing arrangement if the agreement is incomplete?
Yes, the UAE Federal Tax Authority can reject or penalize incomplete self billing arrangements. Missing elements like proper VAT registration details, inadequate record-keeping provisions, or failure to meet Cabinet Decision No. 52 of 2017 requirements can result in the arrangement being deemed invalid. This could lead to tax assessments, penalties, and requirement to issue corrective invoices.
How long does self billing authorization remain valid under UAE VAT regulations?
Self billing agreements in the UAE typically remain valid indefinitely unless terminated by either party or revoked by the Federal Tax Authority. However, the agreement must specify review periods and termination procedures as required by UAE VAT regulations. Any changes to VAT registration status or business structure may require agreement updates or reauthorization.
How is a self billing agreement different from a regular supplier invoice under UAE law?
A self billing agreement allows the customer to issue tax invoices on behalf of the supplier, while regular invoicing requires the supplier to generate invoices directly. Under UAE VAT law, self billing requires formal written authorization, specific record-keeping procedures, and compliance with Federal Decree-Law No. 8 of 2017. The supplier remains responsible for VAT obligations despite the customer generating invoices.
How long does it typically take to implement a self billing agreement in the UAE?
Implementation typically takes 2-4 weeks in the UAE, including agreement drafting, legal review, system setup, and Federal Tax Authority notification if required. The timeline depends on the complexity of the arrangement, number of parties involved, and existing invoicing systems. Additional time may be needed for VAT registration verification and compliance system integration.
Which common mistakes invalidate self billing agreements under UAE VAT law?
Common mistakes include failing to include both parties' VAT registration numbers, inadequate record-keeping provisions, missing termination clauses, and insufficient detail about invoice generation procedures. Other critical errors include not specifying responsibility for VAT compliance, lacking proper authorization language required by UAE regulations, and failing to address electronic invoicing requirements under Federal Tax Authority guidelines.
Must both parties be VAT registered in the UAE for a valid self billing agreement?
Yes, both the supplier and customer must be registered for VAT in the UAE for a valid self billing arrangement under Federal Decree-Law No. 8 of 2017. The agreement must include both parties' VAT registration numbers and ensure compliance with UAE Federal Tax Authority requirements. Non-registered entities cannot participate in self billing arrangements for VAT purposes.
About the Self Billing Agreement
A Self Billing Agreement is a commercial arrangement that allows you, as a customer, to generate tax invoices on behalf of your supplier under United Arab Emirates law. This streamlined invoicing process reduces administrative burden while maintaining full compliance with UAE VAT legislation and Federal Tax Authority requirements.
When do you need this document?
You need a Self Billing Agreement when you have regular business transactions with suppliers and want to simplify the invoicing process. This is particularly common in industries with high-volume transactions, such as retail chains working with multiple suppliers, construction companies managing subcontractors, or technology companies with recurring service providers. The arrangement is especially beneficial when you have sophisticated accounting systems that can efficiently generate compliant tax invoices, or when suppliers lack the technical infrastructure to issue electronic invoices meeting UAE standards.
Key legal considerations
Your Self Billing Agreement must address several critical legal elements to ensure validity and compliance. The agreement must clearly define the scope of products or services covered, specify the duration and termination conditions, and establish procedures for invoice generation and approval. You must include provisions for VAT calculation, payment terms, and dispute resolution mechanisms. The document should address data protection and confidentiality requirements, particularly when handling sensitive commercial information. Additionally, you must establish clear audit trails and record-keeping obligations to satisfy UAE Federal Tax Authority requirements during potential inspections.
Legal requirements in United Arab Emirates
Under Federal Decree-Law No. 8 of 2017 on Value Added Tax, your Self Billing Agreement must comply with specific UAE regulatory requirements. Both parties must be registered for VAT purposes, and the supplier must provide explicit written consent for the self-billing arrangement. The agreement must ensure that invoices contain all mandatory elements required by Cabinet Decision No. 52 of 2017, including correct VAT registration numbers, accurate tax calculations, and proper invoice numbering sequences. You must implement systems that prevent duplicate invoicing and ensure the supplier doesn't issue separate invoices for the same transactions. The arrangement must comply with UAE Federal Law No. 18 of 1993 on Commercial Transactions, particularly regarding contract formation and performance obligations. If using electronic systems, you must also adhere to UAE Federal Law No. 1 of 2006 on Electronic Commerce and Transactions, ensuring digital signatures and electronic records meet legal standards for authenticity and integrity.
GOVERNING LAW
Applicable law
This Self Billing Agreement is drafted to comply with United Arab Emirates law. Key legislation includes:
Cabinet Decision No. (52) of 2017 on the Executive Regulations of Federal Decree-Law No. (8) of 2017: Detailed regulations implementing the VAT law, including specific requirements for self-billing arrangements and invoice contents
UAE Federal Law No. 18 of 1993 (Commercial Transactions Law): Governs commercial transactions and business relationships, including provisions about commercial contracts and obligations between parties
UAE Federal Law No. 1 of 2006 on Electronic Commerce and Transactions: Regulates electronic transactions and documents, relevant for electronic invoicing aspects of self-billing arrangements
UAE Federal Law No. 5 of 1985 (Civil Code): Contains general principles of contract law and obligations that apply to all agreements in the UAE
Federal Tax Authority Decision on Tax Invoices: Specific requirements for tax invoice format, content, and issuance, including special provisions for self-billing arrangements
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