In most cases you must include VAT records whether or not you have been paid by your customer. Getty Images
In most cases you must include VAT records whether or not you have been paid by your customer. Getty Images

VAT Q&A: Can I wait until I get paid by my customer before including this revenue on my tax return



I own a recruitment company.  I raise invoices when candidates start their new role, but many clients don’t pay me until the end of the new joiners probationary period.  This can be up to three months or more after the invoice date.  Can I wait until I get paid by my customer before including this revenue on my tax return and paying over the related VAT to the FTA, either by delaying raising my invoices or excluding the unpaid invoices from my VAT return?  What is the situation if the customer refuses to pay, which can happen if the candidate leaves the job or fails their probationary period before my invoice is paid?  EM Dubai 

The Decree law specifies the timeline for issuing Tax invoices and refers to the Date of Supply. The general rule for Date of Supply for services is when the provision of the service is complete, which for your business would be when the candidate starts their new job. You must issue a tax invoice within 14 days of the date of supply. Therefore within 14 days of the candidate starting with their new employer you must have issued the invoice to your client.

Tax periods run for three months and you must submit the return for a quarter within 28 days of the end of that quarter. So once you have issued the invoice you have to include the VAT on the next VAT return regardless of whether you have been paid by your customer. There is no option in the law for you to either delay your invoices past 14 days or exclude your unpaid invoices from your next VAT return.

Article 64 of the Decree Law allows you to adjust output tax payable on bad debts provided specific conditions are met. These are that the service has been provided and the output VAT has already been invoiced and paid to the FTA; six months has passed since you raised the invoice; finally, you should write the debt off in your accounting records and have notified the customer that the debt is written off. This means that you can no longer continue to try to collect the debt. If these four conditions are met you can deduct the output VAT already paid over on your next VAT return.

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Read more:

VAT q&a: My Abu Dhabi start-up now qualifies for VAT. Can we reclaim any tax paid before registration?

VAT Q&A: Does our SME have to pay VAT on a business centre contract signed last year?

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What options do I have if my customers are telling me they are no longer legally allowed to do business with me as I am not VAT registered. I am a properly licensed freelance photographer but because I took a period of maternity leave last year my revenues for the last 12 months are below Dh375,000. What can you suggest, this is damaging my business. AG Fujairah

This is a issue  that I am asked about regularly. As long as you are properly licensed there is no reason why your customers should refuse to work with you just because you are not VAT registered. There is a commonly held misconception that all businesses must be registered for VAT, regardless of the size of their business, and those that are not are in some way operating illegally. Typically it’s larger organisations that are refusing to work with non-VAT registered businesses through fear that they themselves may somehow be breaking the law. It’s also very difficult to prove to a customer that you are not required to register. My advice would be to consider registering on a voluntary basis. To do this you must have achieved a turnover of Dh187,500 in the past 12 months or anticipate that you will reach that threshold in the next 30 days. The FTA are applying these rules strictly and you have to prove to them that you are above the threshold, so provide as much information as you are able, including invoices raised and details of ongoing contracts, especially if you are applying based on reaching the threshold in the next 30 days. If you fail to provide sufficient evidence then your voluntary registration will be declined.

When determining whether you have reached the voluntary threshold you should remember that it is not just your taxable sales which count towards achieving the threshold.  Article 19 of the Decree Law states that you can also include the value of business related taxable goods and services received, as long as they are not part of the taxable sales you’ve already counted. You may also include the value of goods and services purchased from overseas, where no UAE VAT has been charged, which would have been taxable had they been purchased in the UAE. When you are completing your VAT registration I suggest breaking these three elements down and provide the FTA with very clear and detailed evidence that you’re above the threshold.

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Director: Nick Bruno and Troy Quane

Stars: Will Smith, Tom Holland, Karen Gillan and Roshida Jones 

Rating: 4 out of 5 stars

A timeline of the Historical Dictionary of the Arabic Language
  • 2018: Formal work begins
  • November 2021: First 17 volumes launched 
  • November 2022: Additional 19 volumes released
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Farasan Boat: 128km Away from Anchorage

Director: Mowaffaq Alobaid 

Stars: Abdulaziz Almadhi, Mohammed Al Akkasi, Ali Al Suhaibani

Rating: 4/5

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Call of Duty: Black Ops 6

Developer: Treyarch, Raven Software
Publisher:  Activision
Console: PlayStation 4 & 5, Windows, Xbox One & Series X/S
Rating: 3.5/5

The specs

Engine: Direct injection 4-cylinder 1.4-litre
Power: 150hp
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How to protect yourself when air quality drops

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How to get there: Emirates currently flies from Dubai to Orlando five times a week.
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Name: ARDH Collective
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UAE currency: the story behind the money in your pockets
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

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The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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The Two Popes

Director: Fernando Meirelles

Stars: Anthony Hopkins, Jonathan Pryce 

Four out of five stars

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