A tax document that reduces or cancels a previously issued invoice, with the VAT adjusted accordingly.
A credit note is the document issued to reduce or reverse an invoice already sent to a customer, for example after a return, a pricing error or an agreed discount. In the UAE it is a tax credit note with its own mandatory fields, it must reference the original invoice, and it reduces output VAT in the period it is issued.
It matters because the FTA treats credit notes as tax documents, not internal corrections. Businesses that delete or edit invoices instead of issuing credit notes break the audit trail and risk penalties. Under e-invoicing, credit notes are transmitted through the same Peppol channel as invoices, so they must be structured and linked correctly.
In an ERP project, lock posted invoices so they cannot be edited, and make the credit note the only route for a correction. Configure the link to the original invoice, the reason code, and the refund or allocation process. Test partial credits, credits against paid invoices and credits across periods during UAT.
A 30-minute look at how your business runs today, with a senior consultant. Free, and the findings are yours.
Book a 30-minute discovery call