In UAE VAT law, a tax credit note is required whenever the consideration for a taxable supply changes after the original tax invoice was issued. This happens in three main scenarios: a customer returns goods, a discount is applied after invoicing, or a supply is partially or fully cancelled. The credit note must reference the original tax invoice number and must be issued within 14 days of the adjustment. Both the supplier and the customer must adjust their VAT returns in the period the credit note is issued.
Watch out: Issuing a credit note in the wrong VAT period — or failing to issue one at all — creates a mismatch between your VAT return and your customer's input VAT claim. This is a common trigger for FTA queries.
See also: Tax Invoice, Output VAT, VAT Return
