Excluded transactions under UAE e-invoicing

Which transactions are excluded from UAE e-invoicing?

Seven items, in Article 4(1) of MD 243/2025 as replaced by MD 197/2026, in force from 1 October 2026 (MD 197/2026, Art. 2 and 4). Four have no time limit, two run for 24 months (airway bills and tax groups), and the last lets the Minister add more by decision. An excluded transaction is a business transaction with no exchange and reporting requirement (MD 243/2025, Art. 1).

The list is about transactions, not businesses: an airline or a bank stays in scope for its other business transactions (MD 243/2025, Art. 3). Excluded persons are a separate category, which the Minister sets by decision (MD 243/2025, Art. 4(2), as replaced by MD 197/2026); MD 197/2026 itself names none.

Two rules sit outside this list. Sales to consumers are kept out of the system by MD 244/2025 until the Minister decides otherwise (MD 244/2025, Art. 5(2)). And the administrative exceptions the FTA grants for tax invoices under the VAT Executive Regulation do not apply to e-invoices (Guidelines V2.0, §7).

Sources: ^[1][2][3][5]

When is a government transaction excluded?

Only when all three conditions are met: the transaction is conducted by a Government Entity, in a sovereign capacity, and not in competition with the private sector (MD 243/2025, Art. 4(1)(a), as replaced by MD 197/2026; Guidelines V2.0, §7.1). The Guidelines note that this mirrors the government exclusion in the VAT law.

Government Entity has a defined meaning: ministries, government departments and agencies, authorities, and public institutions and bodies, federal or local, plus any entity the Cabinet treats as one for VAT purposes (MD 243/2025, Art. 1). Their other transactions are in scope on their own dates: appoint an ASP by 31 March 2027 and implement by 1 October 2027 (MD 244/2025, Art. 5(1)(c)).

The exclusion covers transactions a government entity conducts itself. A private company that supplies a government entity is not covered by it, and its sales to government are in scope (Guidelines V2.0, §6.2).

Sources: ^[1][5][2][3]

Are airline tickets and passenger services excluded?

Yes, for international passenger transport provided by an airline by aircraft, where an electronic ticket is issued to the passengers (MD 243/2025, Art. 4(1)(b), as replaced by MD 197/2026). The exclusion extends to services the airline provides directly to the passengers that are ancillary to that transport, where an Electronic Miscellaneous Document (EMD) is issued for them (MD 243/2025, Art. 4(1)(c), as replaced by MD 197/2026). Neither item has a time limit.

Each term is defined (MD 243/2025, Art. 1). An airline is an enterprise holding a certificate from the civil aviation authority of the UAE or of another state to operate aircraft for commercial purposes, performing scheduled or non-scheduled air transport services, or both, available to the public for the carriage of passengers, mail or cargo. An electronic ticket is the airline's electronic document with the information and conditions of the passenger contract. An EMD is the electronic document an airline issues under IATA standards for optional or ancillary passenger services.

The text covers international passenger transport only, and only the airline's own supplies. The airline's other business transactions stay in scope unless another item applies.

Sources: ^[1][2]

How long are airway bills excluded?

For 24 months. International transport of goods provided by an airline, where an airway bill is issued, is excluded only for a period of twenty-four months (MD 243/2025, Art. 4(1)(d), as replaced by MD 197/2026). An airway bill is the airline's electronic document confirming receipt of the goods and proving the contract of carriage (MD 243/2025, Art. 1).

The two texts count the 24 months from different points. MD 197/2026 starts them on the date the e-invoicing system becomes effective (MD 243/2025, Art. 4(1)(d), as replaced by MD 197/2026). The Guidelines start them on the date specified in Article 5 of MD 244/2025 (Guidelines V2.0, §7.2), and that article sets several phase dates (MD 244/2025, Art. 5(1)). Neither text names one end date, so we print none: ask your ASP or tax adviser which date applies to your airway bills.

When the window closes, the exclusion stops, and the airline's international cargo services are e-invoiced like any other transaction in scope.

Sources: ^[1][2][5][3]

Which financial services are excluded?

Financial services that are exempt from VAT, or subject to VAT at the zero rate, in accordance with Article 42 of the VAT Executive Regulation (MD 243/2025, Art. 4(1)(e), as replaced by MD 197/2026).

So the test follows the VAT treatment of each service: a bank that charges standard-rated fees to its business customers e-invoices those sales on its phase dates. The Guidelines draw the line for zero-rated exports (Guidelines V2.0, §7.3):

• Financial services exempt from VAT under Article 42 are excluded.
• Exempt financial services supplied to non-resident customers that qualify as zero-rated exports of services under Article 31 of the VAT Executive Regulation are excluded too.
• Financial services that would be standard rated for a resident customer are not excluded, even when they qualify as zero-rated exports.

Sources: ^[1][5]

Are transactions within a tax group excluded?

For 24 months starting 1 January 2027. MD 197/2026 lists business transactions between members of the same Tax Group among the excluded transactions for that period (MD 243/2025, Art. 4(1)(f), as replaced by MD 197/2026), and defines a Tax Group as two or more persons registered with the Federal Tax Authority as a single taxable person under the VAT law (MD 197/2026, Art. 1).

The Guidelines call it a temporary grace period that affects the timing of compliance only. It does not remove intra-group transactions from the scope of the system, it does not change the obligations on the members' other transactions, and when it expires the rules apply in full to intra-group transactions, under the applicable phase (Guidelines V2.0, §6.3.2). Read together, the two texts mean: not required during the 24 months, then required in full.

Use the time to prepare. Each member needs its own TIN, the first 10 digits of its own TRN, not the representative member's (Guidelines V2.0, §2), and the group's internal invoices will need the same checks as any other e-invoice once the period ends.

Sources: ^[1][5]

Can we e-invoice an excluded transaction anyway?

Yes. Notwithstanding the exclusions, a person may voluntarily issue, transmit, share, exchange and report e-invoices and e-credit notes for business transactions. If you do, MD 243/2025 and every related decision on the system apply to you as mandatory rules, except the decisions on violations and administrative penalties (MD 243/2025, Art. 4(3), as replaced by MD 197/2026). Cabinet Decision No. 173 of 2026 says the same from its side: a person who e-invoices voluntarily is excepted from it (CD 173/2026, Art. 2(2)).

A business may choose this to keep one process for all its invoices, for example a tax group that starts intra-group e-invoices before the grace period ends.

Sources: ^[1][4]

What happens when an exclusion window ends?

The transactions come back into scope. For tax groups, the Guidelines say the requirements then apply in full to intra-group transactions, in line with the applicable mandatory phase (Guidelines V2.0, §6.3.2). For airway bills, the exclusion applies only for its 24 months, so the end depends on which start date applies to you (see above).

The list can also grow. The Minister may add transactions and name excluded persons by decision (MD 243/2025, Art. 4(1)(g) and 4(2), as replaced by MD 197/2026), and the Guidelines expect any new exclusion to come through a Ministerial Decision (Guidelines V2.0, §7.4). This page shows the date it was last checked against the Ministry's texts.

Sources: ^[5][1]

Where Vattora fits, and when you do not need it

Vattora is connector software, not an ASP, and it does not decide what is excluded. Its connector applies these exclusions only from the data your system provides: a document is held back when your system or you mark it with an exclusion reason, or when seller and buyer share one tax-group TRN and one of them is flagged as a group member. Nothing is excluded on a guess. An invoice whose lines are all exempt financial services is flagged for you to confirm, a UAE customer without a TRN is not treated as a consumer, and every held document keeps its reason. A document held as a tax-group transaction comes with the option to send it anyway, as a voluntary e-invoice. If all your sales fall under an exclusion, you do not need Vattora.