Congratulations, you have opened your business or side hustle in Dubai! You have worked so hard on setting up everything, have started to gain traction with new clients, but BOOM, you’ve got some knocks on the door from interested clients abroad. If your mind is rightfully thinking ” How am I doing to invoice my clients living outside the United Arab Emirates”, well I’ve got the answers for you right here.
Like any businesses, the invoicing part isn’t the fun part of owning a company! Invoicing clients locally is already a pain but still quite easy to navigate until you get to the point you need to learn how to invoice international clients. Think exchange rates, money transfer, extra admin fees, and the worse, taxes!
So let’s get started on how UAE based companies can invoice international clients.
International Invoicing For UAE based companies
First of all. if you are thinking of not invoicing because your client isn’t in the UAE, stop right there because it is actually mandatory to issue an invoice for any kind of service or product that is up for sale in the UAE, whether or not the recipient is potentially outside of the nation. You will need to include in that invoice very specific details such as:
- Full customer information: Their name and full address
- Full supplier information with the legal entity name, such as free zone or mainland under which the company has been registered in the United Arab Emirates
- Date of issuance of the invoice
- Invoice number (sequential so that the invoice can be uniquely identifiable)
- Price per unit (excluding tax) expressed in any currency (local UAE or currency of the country of the international client)
- The full cost of the work (product or service) with currency details
- Delivery Time
- Tax break down and VAT information
- Payment settlement details: the clear details and instructions on how the payment will be settled, which will include bank account details such as the swift code and IBAN numbers.
- Total amount payable
What VAT should I use for international clients outside the UAE?
The Value Added Tax (VAT) in the UAE is a flat 5% levy that added to most goods and services that are produced or undertaken in the United Arab Emirates. This is barring basic food items, education and healthcare.
Any company providing a function has to invoice international clients accordingly by charging 5% on their services. In addition to the details mentioned above, a newly-setup business in the UAE has to list its UAE VAT registration identification number and Tax Identification Number within its invoice for payment to be processed.
What currency should I use for international clients outside the UAE?
Businesses in Dubai should invoice international clients in the same currency as decided upon in the original purchase order or proposal. A company invoicing international clients in a foreign currency is usually calculated according to the prevailing day’s rate, as published by the Central Bank of the UAE on the bank’s website. You must also show the exchange rate on the day itself when invoicing. It is pretty convenient that businesses in Dubai can invoice international clients in any currency. UDS is my preferred way as the USD is pegged to the AED at 1 USD=3.6725 AED. USD is also a universally-accepted currency and usually highly preferred for invoicing international clients.
Hope this post helped you to have an idea on how to proceed if you ever need to invoice international clients and have the proper documentation in hand to avoid any future fuss!