Proforma Invoice in the UAE: Meaning, When to Use It, and How to Create One

Published: 1 Dec 2025

If you do business in the UAE, you may have come across the term proforma invoice. It is commonly used in trade, services, and international transactions, yet many business owners confuse it with quotations or tax invoices.

This guide explains what a proforma invoice really is, when you should use it, and how to create one correctly without causing accounting or VAT issues.

What Is a Proforma Invoice?

A proforma invoice is a preliminary document sent to a client before issuing a final tax invoice. It outlines the expected cost of goods or services but is not a payment demand and not a VAT invoice.

Think of it as a formal cost confirmation. It shows pricing, quantities, and terms so both parties are aligned before work begins or goods are shipped.

Is a Proforma Invoice Legally Binding in the UAE?

No. A proforma invoice is not legally binding and cannot be used for VAT claims or accounting records. It does not replace:

A tax invoice
A receipt
A commercial invoice for VAT filing

However, it is widely accepted as a reference document for approvals, advance payments, and customs processes.

When Should You Use a Proforma Invoice?

UAE businesses typically use proforma invoices in the following situations:

Requesting advance payment before starting work
International trade or export documentation
Client internal approvals or budgeting
Customs clearance estimates
Confirming prices before issuing a tax invoice

Freelancers, consultants, suppliers, and SMEs commonly rely on proforma invoices to avoid misunderstandings before committing resources.

Proforma Invoice vs Quotation vs Tax Invoice

These documents are related but serve different purposes:

Quotation: A price offer, often negotiable.
Proforma Invoice: A confirmed cost summary before billing.
Tax Invoice: The official document used for payment and VAT.

A common workflow in the UAE is: quotation → proforma invoice → tax invoice → receipt.

Should a Proforma Invoice Include VAT?

A proforma invoice may show VAT amounts for reference, but it should be clearly labeled as “Proforma Invoice – Not a Tax Invoice”.

VAT becomes officially payable only when a valid tax invoice is issued. The proforma invoice should never be used for VAT reporting.

What to Include in a UAE Proforma Invoice

A professional proforma invoice should include:

Document title: Proforma Invoice
Seller and client details
Issue date and reference number
Description of goods or services
Prices, quantities, and totals
VAT shown separately (if applicable)
Payment terms or validity period
Clear note stating it is not a tax invoice

Create a Proforma Invoice Online (Easy Way)

Creating a proforma invoice manually can lead to formatting and calculation errors. Using an online document builder saves time and ensures clarity.

With ZM Softwares, you can:

Create a proforma invoice in minutes
Add your logo and business details
Show VAT clearly without triggering compliance issues
Download or share as PDF

👉 Create a Proforma Invoice Online

Final Thoughts

A proforma invoice helps set expectations, secure approvals, and avoid disputes before money changes hands. When used correctly, it improves professionalism without creating legal or VAT complications.

If you regularly work with advance payments or international clients, proforma invoices are a smart and practical part of your workflow.

Try it yourself: Generate a Proforma Invoice for Free.