Payment Receipt Declarations in the UAE: A Complete Guide

Issuance of a payment receipt is regarded as the essence of business and financial transactions in the UAE. A payment receipt declaration is formal proof that a payment has been made and accepted. Knowledge about the requirements and best practices related to these declarations is important for businesses and individuals in the UAE alike to maintain transparency, accountability, and legal compliance.

What is a Payment Receipt Declaration?

A payment receipt declaration in the UAE is a document that proves that the payment for goods or services has been received. The Payment Receipt Declaration is a very important document which is used by all businesses and individuals to declare the payments they receive from their clients or customers. The declaration is usually required for tax purposes, auditing, and financial record-keeping.

Reasons Why Payment Receipt Declaration is Important in UAE

The Payment Receipt Declaration is important for businesses in the UAE as it: 

• Helps to Comply with tax regulations: The UAE government requires businesses to declare all the payments received by them, including those from sales, services or any other sources. 
• Helps in maintaining proper financial records: The declaration assists businesses in maintaining proper financial records which are required for auditing and financial reporting purposes. 
• Penalties and fines can be avoided: Non-disclosure of payments can lead to penalties and fines from the UAE authorities.

Types of Payments that Require Declaration

The following are the types of payments that are subject to a Payment Receipt Declaration in the UAE:

• Cash payments: All the cash received from clients or customers should be recorded in the payment receipt.
• Bank Transfers: Payments received through bank transfers must also be declared.
• Online payments: All the online payments made through credit cards should also be recorded.
• Other forms of payments: Likewise, forms of payment collected by cheque or promissory notes should also be recorded.

Key Elements of a Valid Payment Receipt Declaration in the UAE

A Payment Receipt Declaration in the UAE should include the following elements:

• Full Contact Details of the Issuer: The payment receipt must contain complete contact information of the issuer which includes their business name and full name and trade name if applicable and address and phone number and email.
• Payer’s Information: The payment receipt must contain complete contact information of the payer.
• Issue Date: The receipt issuance date stands essential because it serves both record-keeping needs and legal requirements.
• Receipt Number (or Unique Identifier): Every receipt should have a Receipt Number (or Unique Identifier) to facilitate the tracking and management of the transaction.
• Description of the Goods or Services: A brief description of the goods or services paid for should be written on the receipt for example electronics purchase or consultation services or monthly rent.
• Amount Paid: The payment amount must be specified exactly in UAE Dirham currency (AED). The amount should specify whether VAT is included in the payment when applicable.
• Payment Method: The payment method needs to be specified in detail (cash, credit card, bank transfer or cheque). The receipt should include the cheque number and bank details when payments are made by cheque. Bank transfers require documentation of the transaction reference number.
• Currency: The payment is made in the United Arab Emirates Dirhams (AED) currency.
• Stamp or Signature of the Issuer: The receipt should be signed or stamped by the issuer to ensure that it is genuine.
• VAT Details (if applicable): The receipt must show VAT details if the issuer has a valid VAT registration and their Tax Registration Number (TRN).

Best Practices for Issuing Payment Receipts in the UAE

To maintain good business practices and to be in compliance, a company has to do the following:

• Issuing Receipt Immediately Upon Payment: The receipt should be given to the payer immediately upon receiving the payment.
• Keep Copies:  The law requires keeping the issued payments receipts in both soft and hard copies for the stipulated retention period.
• Use Clear and Understandable Language: All the details in the receipts should be written in clear and easily understandable language. Unclear descriptions and abbreviations are to be avoided.
• Professional Templates: The use of professionally designed receipt templates not only enhances the business image but also makes sure that all the needed information is included.
• VAT Requirements: All business owners who are VAT registered are required to make sure that their receipts meet the requirements of the Federal Tax Authority (FTA) in UAE in terms of VAT amount, TRN and other required details.
• E-Receipt: The use of E-receipts is legal in the UAE and is also advantageous to both the parties, thus it is important that the e-receipt system is secure and captures all the relevant details.

Consequences of Non-Compliance

It is possible to face penalties and fines from the authorities for not disclosing payment receipts in the UAE. The following are the possible consequences of non-compliance:

• Fines and penalties: The business may be liable for fines and penalties for not declaring the payment receipts.
• Loss of business license: Non-compliance with the declaration of payment receipts may also lead to the business losing its business license in severe cases.

Common Mistakes to Avoid

• Incomplete Information: The receipt becomes ineffective as proof of payment when essential information such as date, amount or description is missing.
• Illegible Receipts: Handwritten receipts that are difficult to read can lead to misunderstandings and disputes.
• Not Retaining Copies: Failure to keep copies of issued receipts can cause problems during audits or in case of discrepancies.
• Non-Compliance with VAT Rules: VAT registered businesses must ensure that their receipts meet the particular requirements set by the FTA.

How Notary Public Dubai Can Help You

At Notary Public Dubai, we understand the importance of complying with the requirements of payment receipt declaration in the UAE. Our team of lawyers in Dubai can assist you with:

• Preparation of payment receipts: We prepare payment receipts that satisfy the requirements of the tax authority in the UAE.
• Declaration of payment receipts: We assist you in declaring your receipts of payments to the UAE authorities.
• Keeping proper records: We also help you keep proper records concerning payments for auditing and financial reporting purposes as well.

Contact us today to find out how Notary Public Dubai can help you in the services of payment receipt declaration and other types of notary services.