Any good new business startup in the run to build on a reputation for delivering, understands that the other end of the operational bargain, includes accurate and prompt payments from clients. The mechanics of local invoicing are still easier to navigate, but when it comes to international clients, traversing fluctuating exchange rates and taxes becomes more complicated.
Here’s a few things to keep in mind for a new business startup when invoicing international clients:
List the details
It is mandatory to issue an invoice for any product or service that is up for sale in the UAE. In addition to detailing the nature of the work, it also needs to include the following:
- Complete customer (name and address) and supplier information, including the correct legal entity name (free zone or mainland) under which it has been registered in the UAE.
- Cost of work with currency specifications
- Date of issuing invoice
- Invoice number (sequential, that uniquely identifies the invoice)
- Price per unit (excluding tax) expressed in any currency (local UAE or currency of the country of the international client)
- Time line for delivery
- Tax break down and VAT information
- Instructions on how to pay, including bank account details (swift code and IBAN numbers).
- Total amount payable
Including the VAT
The Value Added Tax (VAT) is a flat 5% levy added to most goods and services produced or undertaken in the UAE – 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.
Given that the UAE is home to many foreigners, as well as a Middle Eastern hub, companies conduct business across many international currencies. A business setup in Dubai should invoice international clients in the same currency as decided upon in the original purchase order. 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. A new startup business must also show the exchange rate used when invoicing. While a business setup in Dubai can invoice international clients in any currency, as the USD is pegged to the AED, at 1 USD=3.6725 AED, and is one from a pot of universally-accepted currencies, it remains a highly preferred currency for invoicing international clients.
Enlisting the help of professionals when trying to figure out international invoicing is a good idea, especially for new business startups in Dubai, to help you navigate the pitfalls of VAT and taxes. Book an appointment with one of our trusted consultants at Decisive Zone and get expert help on how to set up a business in Dubai today.
Decisive Zone is a business setup company helping you find the best-suited solution when establishing a company in UAE. Decisive Zone will advise you on the corporate structure and jurisdiction to choose from, while covering all technical, administrative and financial aspects of UAE business setup.