Pro-Forma Invoice vs Commercial Invoice vs Tax Invoice vs E-Invoice — What UAE Businesses Should Know

Pro-Forma Invoice vs Commercial Invoice vs Tax Invoice vs E-Invoice

Disclaimer: This article is for educational and informational purposes only, based on Flying Colour Tax Consultant LLC’s understanding of VAT, Customs and invoicing practices in the UAE as of the publication date. It does not constitute legal or tax advice.

For the trading of goods or services, whether it is within the UAE or internationally, different types of invoicing documents are often used by businesses. However, many of them are confused with different terms such as “pro-forma invoice,” “commercial invoice” “tax invoice” and the newly introduced “e-invoice”.

Using an incorrect document at the wrong stage can lead to unnecessary delays, problems with customs, issues with VAT applicability or even result I compliance penalties. This is now very important that the UAE is moving to a national E-Invoicing system.

This blog explains the definition, purpose and proper use of each invoice type under the UAE tax regulation framework and also when you should use which.

What Are the Invoice Types?

1. Pro-Forma Invoice

A non-binding preliminary document issued by a seller to a buyer, typically before the sale is confirmed. This is a non-binding primary document, which is raised by a seller to the buyer before the sale is confirmed.

When it is used:

• While giving a quote for prospective customers

• For  pre-notification before customs in some cases

• For forecasting the cost estimate, including freight, taxes and duties

Key points:

• It is not a demand for making a payment

• Does not trigger VAT or customs applicability

• It cannot be used to claim input credit of VAT or as evidence of sale

2. Commercial Invoice

It is a binding document that promises the sale and shipment of goods to the buyer. It is used for customs clearance and border transit purposes, and is mainly required for import/export of shipments.

Features:

• It includes a detailed description of goods, weight/quantity, HS Codes, value, origin, destination, seller & buyer details, shipping terms, amount, payment terms etc.

• This is used by the customs authorities to assess correct duties, corporate tax or other import/export charges

• Used for logistics and compliance requirements with customs regulations

Important:

• This is not necessarily required to be a VAT invoice, unless the goods are intended for internal sale within the UAE and the seller is a VAT-registered person

3. Tax Invoice (VAT Invoice)

This is a legal document mandatory under UAE VAT law whenever a VAT-registered business makes supplies of taxable goods or services within the UAE.

Required elements (as per the VAT legislation / Executive Regulation / FTA guidance):

• Name of the supplier, address, TRN (Tax Registration Number)

• Customer name, address, TRN (if customer is registered)

• Date of invoice issuance, invoice number / unique sequence following

• Description and correct quantity of goods/services

• Net value, applicable VAT rate, VAT amount, total gross amount, etc

• B2B or B2C transactions within the UAE, on the supply of taxable goods or services, Domestic trade

Purpose:

• It is primary evidence for VAT collection

• For claiming the benefit of Input Tax Credit ( For Buyer)

• To keep the documentation for Audit and compliance requirements

4. E-Invoice (Electronic Invoice)

Under recent FTA regulations (e.g., Ministerial Decision No. 243 / 244 of 2025), the UAE is shifting towards real-time, properly structured and machine-readable invoices: That is, e-invoices.

What’s new:

• Under this, invoices are issued in electronic format (e.g., XML/UBL), should be validated via an Accredited Service Provider (ASP) and required to be reported to the Federal Tax Authority (FTA) portal

• Can identify each transaction, digital signature/QR or UID, depending on the requirements found in the implementation phase

• Should meet the technical specifications demanded by FTA

• It will act as the “official invoice” for tax purposes

When required:

• Once your business falls within the scope of e-invoicing (based on the turnover threshold as defined by the Cabinet / Ministry)

• For all businesses which are VAT-registered and potentially non-registered businesses (depending on the final scope)

Purpose & benefits:

• Real-time validation of invoices results in a reduction of fraud and errors

• Proper audit trail and compliance documentation

• Faster reconciliation between seller and buyer, integration of Export/Import, e-commerce readiness, etc

Practical Examples of When Each Document Should Be Used

Example A: Proposal Phase (No Sale confirmed)

A computer wholesaler shared a Pro-Forma Invoice to a retailer in UAE for units of computer , price per unit and estimated cost of delivery.

· No applicability of VAT or customs duty

· Cannot be used for account keeping or customs clearance

Example B: Export Shipment from UAE

A UAE furniture exporter ships goods to India. They attached a Commercial Invoice for customs clearance at exit and for import procedures there in India.

· No UAE VAT at standard rate of 5% (export is zero-rated under VAT)

· Helps customs authorities abroad for clearance purpose

Example C: Domestic Sale within UAE

A retailer sells machineries to a consumer in UAE. They issue a Tax Invoice (either paper or electronic) showing the net price and VAT at 5%.

· Buyer receives the tax invoice, although a normal consumer who is not tax registered cannot claim input VAT

· Seller records for output VAT, files it in the VAT return

To learn more about Pro-Forma Invoice vs Commercial Invoice vs Tax Invoice vs E-Invoice — What UAE Businesses Should Know, book a free consultation with one of the Flyingcolour team advisors.

Disclaimer: The information provided in this blog is based on our understanding of current tax laws and regulations. It is intended for general informational purposes only and does not constitute professional tax advice, consultation, or representation. The author and publisher are not responsible for any errors or omissions, or for any actions taken based on the information contained in this blog.