Definition

A Credit Note is a document issued by a supplier to reduce the value of an invoice already issued. In UAE VAT, it is required when the supplier overcharged or goods/services were returned.

Key points

• Must include reference to the original invoice.
• TRN and VAT details are mandatory.
• Reduces output VAT in the supplier’s VAT return.
• Must be issued within the same or subsequent tax period.

Practical example

A supplier mistakenly charges AED 5,250 (AED 5,000 + VAT) instead of AED 4,200 (AED 4,000 + VAT). They issue a credit note for AED 1,050 to correct the invoice.

Why it matters

Credit notes protect both businesses and customers by ensuring VAT compliance and financial accuracy.