Two Phases, Two Deadlines
The UAE Federal Tax Authority is rolling out e-invoicing in two phases driven by annual revenue. Phase 1 applies to large taxpayers; Phase 2 sweeps in the rest. Both phases use the same PINT AE format and the same Peppol 4-corner model - what differs is when each cohort must be live.
Phase 1: Large Taxpayers
Who: Businesses with annual revenue of AED 50 million or more.
When: Mandatory from 1 January 2027.
Key milestone before that: ASP appointment via EmaraTax by 30 October 2026. This was extended from the original 31 July 2026 deadline.
Phase 1 covers the businesses that generate the bulk of taxable transactions in the UAE - large retailers, enterprises, manufacturers, contractors, and free-zone groups that exceed the revenue threshold. By starting with this segment, the FTA captures most of the country's invoice flow with the fewest implementations.
Phase 2: Smaller Businesses
Who: Businesses with annual revenue below AED 50 million, including those that are not VAT-registered if they fall within scope.
When: Mandatory from 1 July 2027.
Phase 2 is broader and more numerous - SMEs, professional services firms, smaller traders, and free-zone start-ups. The compliance challenge for Phase 2 is less about technical complexity and more about access to affordable, well-supported ASPs and ERP-ready connectors.
What is the Same Across Both Phases?
- Format - PINT AE (Peppol Invoice Standard for UAE), UBL XML
- Exchange - Peppol 4-corner model through Accredited Service Providers
- Reporting - simultaneous data submission to the FTA
- Scope - B2B and B2G transactions (B2C is currently out of scope)
- Authentication - digital signatures for integrity and authenticity
What is Different?
The biggest practical differences between Phase 1 and Phase 2 are timeline pressure, resource scale, and ERP readiness.
- Timeline. Phase 1 businesses have less than a year to comply from now. Phase 2 has six additional months but should not delay - vendor capacity will be tight in late 2026 and early 2027 as Phase 1 onboards.
- Resourcing. Large taxpayers typically have dedicated IT and tax teams; SMEs do not. Phase 2 businesses will lean heavily on their accounting software vendor and ASP for turnkey deployment.
- ERP readiness. Phase 1 will see custom connectors to SAP, Oracle, and Dynamics. Phase 2 will rely on out-of-the-box integrations with Tally, Zoho Books, Sage, and similar SMB stacks.
How to Decide Which Phase Applies
The test is annual revenue, not headcount, not industry, not legal form. If your annual revenue crosses AED 50 million in any covered financial year, you are in Phase 1. If you are below the threshold but otherwise in scope, you are in Phase 2.
Important: revenue is measured in line with your audited financial statements, not your VAT return turnover alone. A mismatch between the two is a common source of confusion. Confirm with your finance team or auditor before assuming a phase.
Why Phase 2 Businesses Should Not Wait
It is tempting for sub-AED 50M businesses to read "July 2027" as plenty of time. Three reasons not to:
- Your customers in Phase 1 will expect PINT AE invoices from you before July 2027. If you sell B2B to a Phase 1 customer, they will want all suppliers reporting electronically to keep their AP process consistent.
- Vendor onboarding capacity will be saturated in Q1 and Q2 of 2027 as Phase 1 goes live and Phase 2 starts queuing.
- Master data clean-up takes time. Customer TRNs, addresses, item catalogues, and tax codes need to be validated and standardised. Doing this before you connect saves rework.
Next Steps
InvoiceNet supports both Phase 1 and Phase 2 customers. Talk to us about a readiness assessment, an ASP appointment, or a free sandbox trial.