VATupdate

Bad Debts Adjustments and Reversal of Input Tax

Do you know VAT Paid on unpaid customers which is outstanding for more than 6 months could be adjusted in the subsequent VAT return. There is a specific tab called Adjustment tab where you can adjust the output tax paid on accounts receivables which are outstanding for more than 6 months from the due date. There are specific conditions associated with these adjustments. The adjustments could be done after fulfilling the conditions mentioned in article 64 of Federal Decree-Law No. (8) of 2017 on Value Added Tax. The conditions as per Article 64 are:

  1. Consideration has been written off in full or part as a bad debt.
  2. Notification or intimation has to be given to the customer that this amount of consideration has been written off.
  3. More than six (6) months has passed from the due date of the supply.
  4. Goods and Services have been supplied and the Tax has been charged and paid.

Source GCCFintax

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