A tax credit note’s intent is to indicate changes in the value or tax treatment of a taxable supply, which may result in a reduction in the amount of VAT payable or an increase in the amount of VAT reimbursed to the customer.

A Tax Credit Note under VAT is a document that certifies that value-added tax has been paid on products or services in the United Arab Emirates. It provides evidence of the sale and can be consulted to estimate future VAT obligations. Another popular name for the note is “tax invoice.”

The UAE’s Tax Credit Note’s Purpose

A registered supplier’s Tax Credit Note will have two implications:

• Reduction of the supplier’s tax liability for the supply
• Reduced input tax that the recipient might claim back for the supply

Under the Value Added Tax (VAT) system, tax credit notes serve a purpose in the United Arab Emirates. They are generated when a supplier lowers the cost of the goods or services it provides to its consumers or when it modifies previously presented invoices. As a result, providers may choose to provide tax credit notes to their clients in place of refunds and exclude any applicable VAT sums. This guarantees that both parties to the transaction abide by the rules set forth by UAE VAT law.

Electronic Tax Credit Note

An “Electronic Tax Credit Note” is a digital or electronic version of a credit note that is used for Value Added Tax (VAT) or other tax-related purposes. Electronic tax credit notes have become prevalent in modern business organizations since they facilitate record-keeping and can be effortlessly incorporated into accounting and tax management systems.

Information that must be provided in a tax credit note?

You must include specific required information on a tax credit note in accordance with the administrative requirements of the UAE VAT Law. In the UAE, a tax credit note must contain the information listed below:

• “Tax Credit Note” is stated in bold.
• The Registrant making the supply’s name, address, and Tax Registration Number (TRN)
• The receiver’s name, address, and TRN when the person who gets the item is a registrant
• The day the Tax Credit Note was generated.
• The price of the good or service indicated on the tax invoiceAn overview of the events that led to the issuance of the Tax Credit Note
• Adequate details to recognize the supplier that the Tax Credit Note pertains to