Guides · 6 min · Updated 20 Oct 2026

UAE tax credit notes: when, what and which return

When a UAE supplier must issue a tax credit note, the 14-day rule, the Article 60 fields, which VAT return each side adjusts, and a worked example.

The short answer

When the VAT on an invoice turns out to be too high, the supplier corrects it with a tax credit note, not by editing the invoice. This happens when a supply is cancelled, the price is reduced, goods are returned or VAT was charged in error. The credit note must be issued within 14 days of the event that caused it. It must carry the fields in Article 60 of the Executive Regulation. The supplier reduces its output tax, and a registered customer reduces its input tax by the same amount.

If the VAT was too low, the supplier issues a new tax invoice for the difference instead.

When a credit note is needed

A customer who simply does not pay is not a credit note case. That is bad debt relief under Article 64, with its own conditions and a six-month wait.

The supply was cancelled.
The VAT treatment changed because the nature of the supply changed.
The agreed price changed: a discount, a rebate or a settled claim.
Goods were returned, or services not performed, and the money refunded in whole or part.
VAT was charged in error, such as at 5% on a zero-rated export.

What a tax credit note must show (Article 60)

Once you issue e-invoices, Article 60(8) removes the requirement for the original value, the correct value and the difference. A customer can issue the credit note for the supplier (“Tax Credit Note created by buyer”) only where both are registered and have agreed in advance that the supplier will not issue one.

The words “Tax Credit Note” clearly displayed
The supplier's name, address and TRN
The customer's name, address and TRN, where the customer is registered
The date of issue
The value shown on the original invoice, the correct value, the difference, and the VAT on the difference, in AED. For a second credit note on the same invoice, the starting value is the value after the first one.
A brief explanation of why it was issued
Enough information to identify the original supply, in practice the invoice number and date

Which return, and when a voluntary disclosure is needed

The supplier reduces its output tax in the return for the period in which it issues the credit note, and the registered customer reduces its input tax in the period in which it receives it. For a genuine change after the supply, such as a rebate, a return or a cancellation, that is the end of it.

Errors are different. KPMG reports that, under FTA private clarifications, a supply wrongly treated as zero-rated must be corrected through a voluntary disclosure for the original period where the error exceeds AED 10,000, even though the corrective documents are issued now. Treat any error-driven correction above AED 10,000 as a disclosure question first and a credit note question second.

Worked example

On 5 March a supplier invoices a registered customer AED 200,000 plus VAT of AED 10,000. On 25 April they agree a 10% price reduction for late delivery. The supplier must issue the credit note within 14 days, by 9 May. It shows the original value AED 200,000, the correct value AED 180,000, the difference AED 20,000 and VAT on the difference of 20,000 × 5% = AED 1,000.

The supplier reduces output tax by AED 1,000 in its April to June return, and the customer reduces input tax by AED 1,000 in the same quarter. If a further AED 5,000 credit follows in August, the second note starts from AED 180,000 and shows a correct value of AED 175,000, a difference of AED 5,000 and VAT of AED 250.

How Hysaab applies this

Hysaab tests every inbound credit note against Article 60: the supplier TRN, the reference to the original invoice, the original and corrected values and the VAT on the difference. It holds any credit note that does not identify the invoice it corrects, so the input tax reversal lands against the right supply.

Questions people actually ask

How long does a UAE supplier have to issue a tax credit note?

14 days from the date of the event that requires the adjustment, such as the agreed price reduction or the return of the goods.

What must a UAE tax credit note include?

The words Tax Credit Note, the supplier's and registered customer's names, addresses and TRNs, the date, the original value, the correct value, the difference and the VAT on it in AED, a brief reason, and information identifying the original supply.

In which VAT return does the customer reverse the input tax?

In the return for the period in which it receives the tax credit note, reducing input tax by the VAT shown on the note.

Can I use a credit note to correct VAT charged in error?

Yes, but where the error exceeds AED 10,000, check whether a voluntary disclosure for the original period is also required. The FTA has required one for supplies wrongly treated as zero-rated.

Is a credit note needed when a customer does not pay?

No. Non-payment is handled through bad debt relief under Article 64, not a credit note.

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Disclaimer

General information for Gulf businesses, not tax advice. Regulations move: verify against the official FTA/ZATCA text or your advisor before acting.

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