Credit notes: name the original invoice, its date and a reason

In short

A credit note reduces an invoice you already issued. From go-live, every credit note must name the invoice it reduces, that invoice's issue date and one reason chosen from a fixed list. Your accounts team adds these three items when they raise the credit note.

Why eInvoicing needs it

A credit note is the only way to lower, cancel or correct an invoice once it has gone out. The UAE eInvoicing system links each credit note to the invoice it reduces, so the buyer and the Federal Tax Authority (FTA) can match the two. Without the link, the credit note is rejected. The one exception is a period volume rebate under code VD, described below.

There are two kinds of credit note, one for each kind of invoice:

Original invoice	Credit note that reduces it
Tax invoice (type 380)	Tax credit note (type 381)
Commercial invoice out of scope of tax (type 480)	Credit note out of scope of tax (type 81)

The reason list comes straight from the VAT Law. Article 61 lists the five cases where a seller adjusts output tax after a sale, and each reason code points to one of them. The code DL8.61.1.A means "Decree-Law No. 8, Article 61, Clause 1, case A".

Code	Reason	Plain example
DL8.61.1.A	The supply was cancelled	The customer cancels the order after you invoiced it.
DL8.61.1.B	The tax treatment changed due to a change in the nature of the supply	Goods invoiced at 5% for local delivery are later exported instead, and the sale becomes zero rated.
DL8.61.1.C	The agreed price changed	You agree a 3% settlement discount, a volume rebate or a price cut for poor quality after the invoice went out.
DL8.61.1.D	Goods or services returned	The customer sends back 10 cartons of a 50-carton delivery.
DL8.61.1.E	Error in the invoice	Wrong unit price, wrong quantity, or VAT charged where it should not have been.

A volume rebate that covers a whole period and cannot be traced to specific invoices uses the code VD (volume discount) and names no invoice. Where you can trace the invoices, use C and name each one.

Every credit note carries positive amounts, no payment due date, and the same VAT category and rate as the original line. One credit note can cover several invoices: one reference and date per invoice, one reason for the whole note.

What good looks like

Al Noor Trading LLC (Tax Registration Number, TRN, 101010100200003) sold 50 cartons to Gulf Spice Imports FZE (TRN 100041283700003) on invoice ANT-2027-0154 dated 12 March 2027. Gulf Spice returned 10 cartons.

Field	Before	After
Document	"Credit Note" printed at the top	Tax credit note (type 381)
Original invoice	Mentioned in the narration, or missing	ANT-2027-0154
Original invoice date	Missing	2027-03-12
Reason	"Sales return" in free text	DL8.61.1.D, goods or services returned
Amount	AED 2,000.00 plus VAT 100.00	AED 2,000.00 plus VAT 100.00 (positive)
Due date	"30 days"	Empty

How to fix it in Tally

1. Raise every sales reduction as a Credit Note voucher, never as a Sales voucher with negative quantities.
2. In the party ledger's bill-wise details, choose Agst Ref (against reference) and select the original invoice. This ties the credit note to the invoice in your books.
3. If your Credit Note screen shows fields for the original invoice number and date, fill both. If it does not, ask your Tally partner to add them, so they export as separate fields and not only in the narration.
4. Record the reason. Until a dedicated field exists, start the narration with the code, for example DL8.61.1.D Goods returned. Ask your Tally partner for a user-defined field (UDF) with the reason codes as a fixed list, so nobody types free text.
5. If one credit note covers several invoices, add one Agst Ref line per invoice in the bill-wise details.
6. Keep credit notes on their own numbering series.

How to fix it in Excel or another system

Add three columns to your credit note template or export:

Column	Format	Example
Original invoice number	Text, exactly as on the invoice	ANT-2027-0154
Original invoice date	YYYY-MM-DD	2027-03-12
Credit note reason code	One code from the list	DL8.61.1.D

For a credit note that covers several invoices, repeat the row once per invoice with its own number and date. Leave the due date column empty.

If you use an ERP, ask your ERP partner to make the original invoice and the reason mandatory when a credit note is raised, with the reason as a drop-down that does not accept free text.

Checklist

• Every credit note names the invoice it reduces and that invoice's date.
• Every credit note carries one reason code from the list.
• Credit notes against out-of-scope invoices use type 81, not 381.
• Amounts are positive and the due date is empty.
• A credit note covering several invoices lists each one.

The law

• Federal Decree-Law No. 8 of 2017 on Value Added Tax (VAT Law), Article 61(1): the five cases for adjusting output tax (cancelled supply, change in the nature of the supply, changed consideration, returns, tax charged or applied improperly). UAE Ministry of Justice legislation portal
• VAT Law, Article 62(2) and Article 70(1): issue a Tax Credit Note when output tax is reduced, within 14 days of the event.
• Executive Regulation of the VAT Law, Article 60: the particulars of a Tax Credit Note.
• Ministerial Decision No. 243 of 2025, Article 6(2) and 6(5): when an Electronic Credit Note must be issued, and the 14-day timeline. MoF PDF
• Cabinet Decision No. 106 of 2025, item 3: AED 100 for each Electronic Credit Note not issued and transmitted, up to AED 5,000 per calendar month. MoF PDF
• MoF UAE Electronic Invoicing Guidelines, section 12.2 item 3: one electronic Tax Credit Note may reference several electronic Tax Invoices. MoF PDF
• Peppol PINT AE Billing, section 1.5.4 (credit note type 381, reason code BTAE-03 compulsory, VD for volume discounts) and section 2.3.8 (preceding invoice reference IBG-03 with invoice number and issue date). PINT AE specification; reason code list: AE-CreditReason