UAE tax: 'Accidental businesspeople' won’t survive shift to e-invoicing

E-invoicing will bring even occasional earners into the UAE’s formal compliance net. Getty Images

I want to talk today about the incidental businessperson, and by extension its many subcategories that include the occasional and accidental trader.

This has never been a grey area in the UAE, but many have treated it as such. In the service sector, it became a real issue in 2018 with the introduction of VAT. However, even then there was a numerical value before it became an infraction of the rules.

Corporate tax added yet another component. But it is electronic invoicing, coming in 2026, that will be the straw that breaks the camel’s back.

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Have you ever accepted the offer of a one-off piece of paid work, something that has nothing to do with your professional career?

This might, for example, involve you appearing as an extra in an advert, in print or on TV. You may have done it as a favour or because you were curious about the process and industry.

Having been paid, you are an accidental businessperson. You have traded a service into the media industry.

Maybe, having enjoyed seeing yourself on glossy pages, you begin doing these more regularly. Say, a few times a year, one to two days in total. The money is not particularly material, but it can be argued that you are now an incidental businessperson.

You might ask: if I sell my personal car, am I also trading? No. The same would apply to old furniture or unwanted gifts. Intent is important, however, and so is how you act. Is it done repeatedly with a predetermined and guaranteed outcome?

To be commercially active in the UAE requires a trade licence. The official permission slip in cases like these has many names: sole establishment, professional licence, etc.

It was common pre-2018 for people to club together and trade through a single company. This saved money. It also made it easier to reach the registration threshold. Record keeping became of paramount importance as quarterly reports to the Federal Tax Authority needed to be completed.

The critical risk was if one or more of the individuals failed to pay their portion of any VAT due. The shareholders might be jointly and severally liable for any monies due, but the first name to be held to account would be the manager in charge. That is the person whose name appears on the face of a trade licence.

It is much more uncommon today, but occasionally you come across this archaic structure, primarily and unsurprisingly because an issue has arisen.

When turnover was under Dh375,000 ($102,110) in any 12-month period, VAT registration could be legally ignored. So too is the case with corporate tax where a professional licence was involved, the threshold being Dh1 million. This applies only where someone has a juridical licence.

In a world with mandatory electronic invoicing, the risk of not being registered is now shared with customers. That process begins in June 2026 with a pilot launch. You can volunteer to join.

If your revenue exceeds Dh50 million, you must appoint an accredited service provider in time to be live by January 1, 2027. For everyone else, the same steps apply except the initial deadline, which is March 31, 2027 with full implementation by July 1.

I have written about the benefits of staggered and lengthy roll-outs for new regimes and confess to being happy at the approach being taken here. The information is contained in Ministerial Decision No. 44 of 2025, which is a must-read for any legal entity.

To reduce taxable profits an entity must have valid invoices for costs that are wholly and necessarily required in the conduct of the business. Given all business-to-business invoices ultimately need to be filed online through the Federal Tax Authority portal, what happens when it is an occasional trader?

You may need to disallow any claim against profits or risk your occasional supplier causing you a penalty. For the first time I have seen some detailed legislation on self-billing. This is where an entity raises an invoice on itself, on behalf of a supplier. But for this to be approved, both parties to the transaction must be registrants.

This brings us to another short piece of legislation that everyone needs to study: Ministerial Decision No. 243 of 2025. For those who believe it is unlikely that there is the time or the inclination to deeply review transactions, Article 10 should give them pause.

All data received can be reviewed. As this is detailed and electronic, AI software should be able to quickly pick up any unmatched transactions. This information may also be shared across UAE government entities and, where agreed, foreign government bodies. The world just got a lot smaller.