UAE VAT Bad Debt Relief: Your Clock Starts at Supply

A trading company in Sharjah called us about an invoice that had never been paid. The goods had gone out in January. The terms were 60 days, so payment was due in March. Their bookkeeper, working carefully from a guide he trusted, had diarised the bad debt relief for September — six months after the due date, exactly as the guide said. When we walked the file back to the accounts that state the law in full, the date moved. On those accounts, the six months run from the date of supply. The relief had been available in July. Two months of VAT on an unpaid invoice had sat unclaimed, not because anyone was careless, but because the start line in his guide was in the wrong place. That is not a rounding error. On unpaid invoices, the calendar is the money.

This post is about UAE VAT bad debt relief, and about one article read two ways. The careful accounts of Article 64 of the VAT Law agree on when the clock starts and what the customer who owes you must do at the other end. A bad debt guide opened in full by our researcher moves the first and never prints the second. We do not tell any named business that a specific invoice qualifies, which box its adjustment belongs in, or that a named customer must repay input tax. Those calls belong to Article 64 itself and to each filer's own supply, write-off and notification dates.

UAE VAT Bad Debt Relief: The Four Conditions in the Careful Accounts

Start with the version the careful accounts share. A law firm perspective on Article 64, published nine days before our research run, a verbatim summary of the VAT Law, and a clarification account built on FTA Public Clarification VATP024, updated on 25 October 2026, all state the supplier's test in the same shape. Four conditions, all of them, before relief opens.

• The goods or services were supplied, and the VAT was charged and paid. Relief is about VAT you have already accounted for on a real supply, not VAT you invoiced and never declared.
• The consideration is written off in full or in part as a bad debt in your accounts. A provision, a worry, a general allowance against old debts — none of that is a write-off. The debt itself must be written off.
• More than six months have passed from the date of supply. Not from the invoice due date. Not from the last chase email. From the supply.
• You have notified the recipient of the amount written off. The customer who did not pay must be told, in a way you can evidence, what you have written off.

Read that third condition slowly, because everything in this post turns on it. Date of supply is a fixed, documented event. It sits in your tax invoice history and your ledger whether anyone chases the debt or not. A clock that starts there starts on the same day for the supplier, for the recipient, and for anyone reviewing the file later. It does not move with your credit terms, and it does not move with how patient you chose to be.

That precision is the point. Bad debt relief is an adjustment to tax you already paid on money you never received. The law, on the careful accounts, gives that adjustment a hard calendar, a documented write-off, and a notification, so the claim can be checked invoice by invoice. Loosen any one of the three and the claim stops being checkable — which is why moving the start line, even by a helpful-looking month or two, is not a small editorial choice.

The Guide That Starts the Clock at the Due Date, Three Times

Now read the other shelf. A bad debt guide opened in full in this research run states the test three times, and moves the start line all three times. Its Key Takeaways say relief comes only after six months have passed from the due date. Its conditions list repeats that more than six months must pass since the date the payment was due. Its comparison table reduces the test to a debt that is more than six months overdue.

Three statements, one direction. Every one of them starts the clock later than the careful accounts do, by exactly the length of your credit terms. On 30-day terms, that is a month of relief claimed late. On the 60-day terms a lot of UAE business-to-business trade actually runs on, it is two months. On 90-day terms, a full quarter. The longer and more generous your terms were to the customer who never paid, the later this guide lets you recover the VAT on his default. Generosity, punished twice.

Think about which invoices this hits. Not the small ones you write off without thinking. The large, slow, disputed-in-spirit ones — the invoices big enough that the VAT on them is real money, owed by customers important enough that you gave them long terms in the first place. Those are exactly the files where a bookkeeper reaches for a guide, follows it faithfully, and diarises the wrong month. We have seen the same pattern in our post on the VAT tax point: one date that looks like the obvious trigger, and a different date in the rules that actually picks the period. The invoice date was not the quarter there. The due date is not the clock here.

Where the claim goes is garbled in the same guide tradition

The timing confusion does not stop at the start line. The opened guide places the claim in Box 7 of your next VAT return. A clarification account, describing the same adjustment, places it in the return for the period in which the six months elapsed — and then garbles its own trigger in the same sentence, offering the period in which the date of expiry for the payment deadline has arrived as an alternative start. Two clocks, offered as one, in a single sentence about which return to use.

We are not going to resolve the box question for your file in a blog post, and you should be suspicious of anyone who does without seeing your return. What we can say, plainly, is this: a guide that cannot keep its own start line straight across three statements on one page has not earned your filing position. Take the period question to Article 64, to VATP024, and to your own supply and write-off dates — the documents that will be asked for if the adjustment is ever reviewed.

UAE VAT Bad Debt Relief: The Half of Article 64 Your Guide Never Prints

There is a second silence in the opened guide, and it is the louder one. Article 64, on the careful accounts, has two sides. The supplier who adjusts and notifies is only half the article. The other half belongs to the recipient — the customer who claimed input tax on an invoice he then did not pay.

The law firm account states it in terms: where the supplier has adjusted and notified, and payment has not been made for over six months, the recipient must reduce the input tax it recovered. The verbatim law summary carries the same duty, in its own three-condition shape. The opened supplier guide never mentions it at all. Not in its takeaways, not in its conditions, not in its table. A reader of that guide who is himself a slow payer — and in a chain of late payments, most businesses are both supplier and recipient in the same quarter — finishes the page believing bad debt is something that happens to other people's books.

It is not. If a supplier writes your invoice off, adjusts, and notifies you, your books may be holding input tax the article takes back. A finance team that only runs the supplier side of Article 64 — chasing its own relief, diarised late from the due date — and never processes the recipient side when notifications land in its own inbox is building two errors in opposite directions: claiming its own relief late, and holding a reduction it owes indefinitely. That is the same one-sided reading we pulled apart in our post on Know Your Supplier: the VAT system in the UAE increasingly works as a chain, and reading only your own link in it is how a clean ledger becomes an exposed one.

A provision is not a write-off, in either direction

One more distinction, because cleanup work gets it wrong constantly. The careful accounts require the consideration to be written off as a bad debt in the accounts. A general provision against doubtful debts — a percentage held against the aged ledger because some of it, statistically, will fail — is not that event. It names no invoice, it writes off no consideration, and it notifies nobody.

That matters twice. First, a supplier who provisions early and claims on the provision has claimed before the article allows. Second, a cleanup that merges provisions and write-offs into one doubtful-debt line destroys the evidence the claim stands on: which invoices, written off when, notified how. Historic receivables work has to separate the two before relief is touched, invoice by invoice, or the relief file is built on the wrong event. It is unglamorous ledger work, and it is exactly the work our post on supplier verification described from the other side: the software records what you tell it, and the liability for what you told it stays with you.

How to Run the Bad Debt File on the Careful Reading

None of this needs new software. It needs the aged receivables ledger run as a relief file, on the careful accounts' dates, before the return is built.

• Measure the six months from each supply date. Build the clock invoice by invoice in the aged ledger, not from due dates and not from a single diary note for the whole ledger. A mixed ledger has mixed clocks.
• Separate provisions from formal write-offs. Keep the general provision visible as a provision. Record each write-off as its own dated event against a named invoice and amount, in full or in part.
• Notify, and keep the proof with the invoice. The notification to the recipient is a condition, not a courtesy. File the notice and its delivery evidence in the same place as the supply invoice and the write-off entry.
• Take the adjustment in the period the conditions complete. Supply, VAT paid, write-off, six months elapsed, notification sent — the period follows the last condition to complete, checked against Article 64 and VATP024 for your file, not against a guide's box number.
• Run the recipient side every period. Search your own inbox and post for suppliers' write-off notifications. Where one has landed and the conditions on the careful reading are met, process the input tax reduction in the same discipline — before a review finds it for you. The closing discipline is the same one we set out in our post on VAT deregistration: the last entries in a VAT story are the ones nobody diarised.

Notice what this list does not contain: a new system, a new subscription, a new dashboard. It contains dates, documents and one inbox search. Bad debt relief fails on administration, not on interpretation seminars — the interpretation, on the careful accounts, is already clear enough to run a ledger by. What fails is the diary built from the wrong guide, and the notification sitting unread in a shared mailbox while the return goes out without it.

An honesty note on sources

Everything material here is attributed to the account that states it. The four supplier conditions, with the six months measured from the date of supply, and the recipient's duty to reduce recovered input tax after adjustment and notification, are from a law firm perspective on Article 64 published on Legal 500 nine days before our research, a verbatim summary of Article 64 of Federal Decree-Law No. 8 of 2017, and the FTA's clarification tradition under VATP024, as summarised in an account updated on 25 October 2026. The due-date clock, stated in Key Takeaways, in a conditions list and in a comparison table, the Box 7 placement, and the absence of any recipient-side duty, are from a bad debt guide on easmea.com, opened in full in this research run, covering the tax treatment of bad debts and provisions. These are published accounts and practitioner summaries, not a ruling on your file. We have not told any named business that a specific invoice qualifies. Read Article 64 and VATP024, and run your own supply, write-off and notification dates against them, before you claim — or hold — anything on anyone's say-so, including ours.

The practical move costs an afternoon: open your aged receivables ledger, find the oldest unpaid invoice you have already written off, and check which date your diary counted six months from. If the answer is the due date, your relief is running one to two months late on every invoice in that file, and your guide owes you an explanation it cannot give. Escrow's VAT and FTA compliance service runs the bad debt file off the Article 64 conditions as the careful accounts state them — clock from supply, write-off and notification documented per invoice, recipient-side reductions processed when notifications land. Start with a free VAT registration health check at escrowconsultinggroup.com, and bring the invoice that has been sitting unpaid the longest. We will show you which clock it is actually on.