UAE VAT Bad Debt Relief: Conditions, Evidence and Return Treatment
Editorial responsibility: Valusage Advisory Team (Editorial Practice) · Reviewed by Valusage Business Advisors Technical Practice (Technical Practice)
Direct answer
UAE VAT bad-debt relief may be available when VAT was charged and accounted for, the unpaid consideration has been written off, more than six months have passed from the date of supply and the customer has been notified of the amount written off. Relief is limited to the written-off amount, and the supplier should retain invoice, return, ledger, ageing, write-off and notification evidence.
Decision graphic
Build the bad-debt relief file in sequence
Bad-debt relief evidence timeline
- 01SupplyVAT accounted for
- 02Write-offConsideration recorded as bad debt
- 03Six monthsElapsed from the date of supply
- 04NotifyCustomer told the written-off amount
- 05AdjustVAT amount claimed in the correct return box
Decision table
Bad-debt relief readiness check
| Condition | Evidence | Common gap | Decision |
|---|---|---|---|
| VAT charged and accounted | Invoice and filed return | Invoice not reconciled to return | Trace before adjustment |
| Consideration written off | Ledger entry and approval | Provision only | Confirm actual write-off |
| More than six months elapsed | Supply date and ageing | Measured from due date without review | Recalculate from supply date |
| Customer notified | Notice and delivery evidence | No retained notification | Complete evidence before claim |
Bad-debt relief connects a commercial collection decision to a VAT adjustment. Finance should not treat an overdue balance or an accounting provision as sufficient on its own.
What are the four conditions? FTA Public Clarification VATP024 identifies four conditions: the taxable supply and VAT were accounted for; the unpaid consideration was written off; more than six months elapsed from the date of supply; and the supplier notified the customer of the amount written off.
Does a provision or overdue balance qualify? The FTA clarification distinguishes writing off a debt from merely creating a provision. The ledger, approval and financial records should show the amount actually written off. For a partial write-off, the adjustment is limited to that part.
What should the customer notification contain? Retain evidence that the customer was notified, including the relevant invoice details and amount written off. VATP024 states that an acknowledgment is not required, but the supplier should be able to evidence the notification.
Where is the adjustment reported? The FTA clarification explains that only the VAT amount is entered in the adjustment column of the relevant Box 1 emirate field. The return working paper should connect the adjustment to the qualifying invoices and retained evidence.
Professional boundary This guide is general information. Eligibility, timing, related-party issues and return treatment should be reviewed against current law and the entity's records before an adjustment is made.
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Professional boundary
This article is general information. It is not a filing opinion, legal advice, audit conclusion, investment recommendation or guarantee of authority acceptance or commercial outcome.
What are the UAE VAT bad-debt relief conditions?+
VAT must have been charged and accounted for, the unpaid consideration must be written off, more than six months must have passed from the date of supply, and the customer must be notified of the amount written off.
Does an accounting provision qualify as a bad-debt write-off?+
A provision alone is not the same as writing off the unpaid consideration. The records and approval should evidence the amount actually written off.
Can UAE VAT bad-debt relief apply to a partial write-off?+
The FTA clarification allows the adjustment only to the extent of the consideration actually written off, provided the other conditions are met.
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