What e-invoicing does not cover: the three exclusions, and the special cases that pull in businesses that thought they were out

The rule before the exception. "Electronic Invoicing is mandatory for any Person conducting Business in the UAE, in respect of every Business Transaction, regardless of whether they are established in the UAE, unless specifically excluded" (chapter 6). If you do not find yourself in the exclusions below, you are in.

What is out of scope by definition

The table in chapter 6.2 classifies transactions by supplier and buyer. In: B2B, B2G, G2B and G2G. Out: every transaction with a consumer on either side — B2C, G2C, C2B and C2C. "Any supplies to or from natural persons who are not in Business are not within the scope", even where a billing or collection agent is used. Neither the supplier nor the agent must issue an electronic invoice to a consumer.

But read the next line: "goods and services supplied to Government Entities (e.g. through contracts tendered in the UAE Government procurement portals) are subject to Electronic Invoicing". The small government supplier is in scope like any B2B supplier.

The three explicit exclusions (chapter 7)

Sovereign activities. A transaction is excluded when all three hold: conducted by a government entity, in a sovereign capacity, and not in competition with the private sector — mirroring the government-entity exclusion in the VAT law.
Supplies by airlines. International passenger transport with an electronic ticket, and ancillary passenger services with an EMD, are excluded. International transport of goods under an air waybill is excluded temporarily for 24 months from the date set in Article 5 of Decision 244.
Exempt financial services. Financial services exempt under Article 42 of the VAT Executive Regulation are excluded, as are those supplied to non-residents and treated as zero-rated exports. But standard-rated financial services supplied to residents are not excluded even where they qualify as zero-rated exports.

Plus "any other Business Transactions as may be determined by the Minister" — an open door for future exclusions by ministerial decision.

Administrative exceptions do not carry over. Chapter 7 is explicit: administrative exceptions the FTA grants for Tax Invoices under the Executive Regulation do not apply to electronic invoices. If you hold an exception from issuing tax invoices for a class of transactions, do not assume it covers the electronic invoice.

The special cases that pull you in (chapter 6.3)

Case	Treatment
A holding company with purely passive income (dividends, interest, rent from its assets)	Out of scope — no business transactions
The same holding company recharging management costs or any fees to a third party or a subsidiary	In scope for those transactions; it must onboard per the timeline
Transactions between members of one VAT group	In scope, with a 24-month grace period from 1 January 2027 (details)
A person with no place of residence in the UAE obliged to issue Tax Invoices	Issues them electronically
A business not registered for VAT	In scope — issues an electronic "Commercial Invoice" instead of a Tax Invoice
A free-zone entity	In scope for B2B and B2G; the invoice requires "beneficiary" details in addition to the customer (scenario 1 in chapter 10.4)

Three common misreadings of the scope

"I sell to consumers, so I'm out." If a single company or government entity is among your customers, your transactions with it are in scope; there is no minimum count.
"My revenue is under AED 50 million, so I'm exempt." The threshold sets when you comply (1 July 2027), not whether.
"I'm not VAT-registered, so it doesn't concern me." The scope applies "notwithstanding VAT registration status"; only the type of electronic invoice differs.