UAE Ministry of Finance Amends E-Invoicing System Rules to Grant Relief for Tax Groups and Data Storage

The UAE Ministry of Finance has introduced key operational updates to the national Electronic Invoicing System through Ministerial Decision No. 197 of 2026, which amends Ministerial Decision No. 243 of 2025. Retroactively taking effect on 1 October 2026, the decree provides targeted compliance relief ahead of the phased mandatory go-live schedule, which begins on 1 January 2027.

The regulatory adjustments introduce a temporary 24-month exclusion for intra-group transactions, remove local data residency restrictions for tax records, and eliminate mandatory two-day system failure reporting, providing businesses with operational flexibility while preserving statutory audit oversight.

Key Operational and Legal Amendments

The decree introduces four substantive revisions to the national e-invoicing framework:

1. 24-Month Exclusion for VAT Tax Group Transactions

Under the amended Article 4, business transactions carried out between members of the same VAT Tax Group (registered as a single taxable person with the Federal Tax Authority) are excluded from the e-invoicing framework for a two-year period, running from 1 January 2027 through 31 December 2028.

• Scope: The temporary exclusion applies strictly to intercompany transactions within an FTA-approved VAT group. Sales to, or purchases from, external third parties remain fully subject to standard e-invoicing timelines.
• Voluntary Option: Tax groups retain the option to issue e-invoices voluntarily for internal transactions during this transition window.

2. Elimination of In-Country Data Storage Mandate

The decision rewrites Article 11, removing the requirement that e-invoices, electronic credit notes, and associated transaction data be physically stored on servers located within the UAE.

• Offshore Storage Permitted: Businesses may now utilize offshore cloud infrastructure or centralized global accounting systems, provided records are retained for the statutory period prescribed under Federal Decree-Law No. 28 of 2022 on Tax Procedures and remain fully accessible and producible upon request by the FTA.

3. Repeal of Two-Day System Failure Reporting

Ministerial Decision No. 197 of 2026 completely repeals Article 12 of the original framework, deleting the legal definition of “System Failure” and removing the requirement for businesses to notify the FTA within two business days of an IT outage or transmission breakdown.

4. Adjustment of Document Issuance Timelines

The decree amends Clause 5 of Article 6, clarifying that e-invoices and electronic credit notes must be issued and transmitted through the e-invoicing network within 14 business days of the underlying transaction date, replacing the previous calendar-day metric.

Unchanged Deadlines and Compliance Priorities

The Ministry confirmed that Ministerial Decision No. 197 of 2026 does not alter the mandatory implementation timelines established under existing regulations:

Practical Implications for Businesses

1. Review VAT Group Status: Confirm whether intercompany entities are formally registered as a single Tax Group under the VAT Law, as common corporate ownership alone does not qualify an entity for the two-year intra-group exclusion.
2. Re-evaluate Cloud Hosting Policies: Organizations with global ERP architectures can leverage international cloud infrastructure for e-invoice storage, provided data retrieval and FTA audit access controls are fully operational.
3. Maintain Internal Failure Protocols: Although the two-day FTA failure notification rule has been repealed, companies must maintain internal business continuity procedures to reconcile un-transmitted invoices once systems recover.

Conclusion

The updates under Ministerial Decision No. 197 of 2026 reflect a balanced regulatory approach, offering commercial entities administrative relief on internal recharges and cloud storage while preserving the overarching January 2027 rollout timeline.