Why this was a question
On paper, many issued a "payment receipt" on collection, then one invoice for the full value at the end with a deduction line for the advance. In e-invoicing every document has a type, fields and a report to the FTA, so a tax base counted twice shows immediately. Appendix 5 (added in version 1.1, 1 June 2026) fixed the rule: "where the businesses receive an advance payment, a tax invoice must be issued at the time of receipt. Therefore, when issuing the final invoice, it should cover only the remaining balance amount, and not the full value".
The official example in numbers
| Document | Type | Net | VAT 5% | Payable |
|---|---|---|---|---|
| Advance invoice ADV-001 (1 May) | 380 tax invoice | 1,000.00 | 50.00 | 1,050.00 |
| Final invoice Final-001 (21 May) | 380 tax invoice | 9,000.00 | 450.00 | 9,450.00 |
| Total | 10,000.00 | 500.00 | 10,500.00 |
The fields that link the two invoices, in PINT AE names:
- IBT-25 and IBT-26 (preceding invoice reference, number and date): ADV-001 and 2026-05-01. In XML this is cac:BillingReference.
- IBT-22 (invoice note): an alternative or addition — "Final invoice for the net amount, reference to advance payment provided".
- cbc:PrepaidAmount may be left blank, since the final invoice already reflects only the outstanding amount and needs no further adjustment for the advance.
Chapter 10.5 (scenarios 9 and 10) adds that where an advance precedes the supply, the "Paid Amount" and "Preceding Invoice Reference" fields are used — either approach is acceptable as long as the tax base is not counted twice.
Retention amounts
In construction and development contracts the owner usually retains 5–10% of each progress claim until the defects period ends. Appendix 5 says businesses "may continue following their existing commercial and accounting practices, provided such practices remain compliant with the applicable VAT and Electronic Invoicing requirements", and sets out one accepted practice:
- Issue an electronic invoice for the amount payable after adjusting for the retention — VAT on that net figure.
- Issue a separate electronic invoice for the retained amount when the buyer becomes liable to release and settle it.
A claim of AED 100,000 with 10% retention: today's invoice for 90,000 + 4,500, and an invoice on release for 10,000 + 500. And you must "ensure that the relevant contractual arrangements and payment obligations are appropriately reflected in the corresponding Electronic Invoices" — write the retention percentage and the contract reference in the note.
Questions for your provider and your accounting system
- Does my system fill BillingReference automatically when I convert an advance invoice into a final one?
- Does my system support several tax invoices per contract with a running balance? (Most contracting systems do through progress claims; make sure the XML export carries it.)
- When the owner pays more or less than the balance after the final invoice, does the system issue an electronic credit note (type 381) rather than a manual adjustment?