Version 1.1 of the UAE Electronic Invoicing Guidelines, published on 1 June 2026, added Appendix 5: a dedicated clarification of how advance payments and retention are handled for PINT AE purposes. Both topics matter most to contracting, construction and project-based businesses, where staged billing and retention clauses are standard commercial practice rather than edge cases. This post works through the appendix's field-level mechanics and its worked example; the governance and ASP contract implications of the V1.1 changes as a whole are covered in the V1.1 what-changed analysis.
Advance Payments: Invoice at Receipt, Then Invoice the Balance
The clarification sets out a two-invoice sequence. When a business receives an advance payment, a tax invoice must be issued at the time of receipt. When the final invoice follows, it should cover only the remaining balance, since a tax invoice has already been issued for the advance. The final invoice does not restate the full contract value.
The Guidelines' worked example uses a contract of AED 10,000 plus 5% VAT with an advance of AED 1,000. The advance triggers a tax invoice (invoice type code 380) showing a tax exclusive amount of AED 1,000, VAT of AED 50 and a payable amount of AED 1,050. The final invoice, also type 380, then shows a tax exclusive amount of AED 9,000, VAT of AED 450 and a payable amount of AED 9,450.
Two structural choices in the example deserve attention. First, the link between the two documents: a reference to the original advance invoice may be included under IBT-25 and IBT-26 (the Preceding invoice reference and its issue date, carried in cac:BillingReference), or a note can be provided in IBT-022. The example's final invoice does both, carrying a BillingReference to invoice ADV-001 alongside a note explaining that the invoice is for the net amount. Second, the cbc:PrepaidAmount field may be left blank. Because the final invoice reflects only the outstanding amount, no further adjustment of the advance is required at document level.
That second point is the one most likely to force ERP rework. Billing configurations that issue a full-value final invoice and net off the advance through PrepaidAmount follow a different arithmetic from the one the Guidelines illustrate: full contract value in the monetary totals, with the advance recovered as a prepayment deduction. The Appendix 5 sequence instead prices the final invoice at the balance from the start. Businesses using down-payment or milestone billing in SAP, Oracle or similar systems should verify which pattern their document flow produces before the mandate applies to them.
Retention: Existing Practice Survives, With a Documented Route
On retention, the position is permissive. Businesses may continue following their existing commercial and accounting practices, provided those practices remain compliant with the applicable VAT and Electronic Invoicing requirements. The Guidelines then outline one acceptable practice: issue an Electronic Invoice for the amount payable after adjusting for the retention amount, and issue a separate Electronic Invoice for the retained amount at the point when the Buyer becomes liable to release and settle it.
The obligation that travels with this flexibility is evidential. Businesses should ensure the relevant contractual arrangements and payment obligations are appropriately reflected in the corresponding Electronic Invoices issued. A retention split that exists only in the contract, with invoices that show no trace of it, leaves the invoice population and the commercial reality telling different stories.
What to Take From Appendix 5
The appendix converts two areas of practitioner judgement into documented positions: advances are invoiced at receipt with a balance-only final invoice, and retention can follow existing practice so long as the invoices reflect it. For any business with staged billing, the immediate action is a comparison between the Appendix 5 invoice sequence and what the ERP currently generates, because the gap between the two is configuration work with a deadline attached.