26 July 2026 · Dubai FAQ
Chasing Unpaid Invoices in Dubai
For Dubai SMEs, the practical path to reclaiming VAT on unpaid invoices starts long before any VAT return adjustment: keep clean aged-receivables records, review overdue invoices realistically rather than optimistically, and decide when a debt genuinely will not be recovered. Once that decision is made, write the debt off in the accounts, and — after more than six months have passed since the date of supply — notify the customer in writing of the amount written off and claim the VAT back through Box 1 of the next return. Good documentation across this whole process, not just the final adjustment, is what turns a written-off invoice into a defensible VAT reclaim rather than an FTA query, and it is often the single most missed source of recoverable cash in a small business's VAT position.
Exiloz Management & Tax Consultant · Dubai-based FTA-focused advisory · VAT, corporate tax & accounting
Track your debtors
Bad debt relief is only ever as good as the receivables tracking behind it — a business cannot claim VAT on a debt it has not identified, aged and honestly assessed. Building a simple aged-receivables report, reviewed monthly, lets a Dubai SME see exactly which invoices are drifting past 90, 120 and 180 days, well before the six-month VAT clock even becomes relevant. The harder step is the judgement call: deciding a debt is genuinely bad, rather than just slow, requires looking at whether recovery efforts — reminders, calls, a formal demand — have actually failed, not simply that time has passed. Once that judgement is made, the write-off in the accounts should follow promptly, because the write-off date is one of the four conditions the VAT claim depends on.
- Keep an aged-receivables report reviewed monthly, not annually.
- Flag invoices approaching and past the six-month mark.
- Distinguish a genuinely bad debt from one that is merely slow.
- Document the recovery attempts made before writing off.
- Write off promptly once the decision is made, not months later.
- A tracked debtors book is the foundation of every VAT claim.
Time it and document it
Once a debt is written off, the claim itself hinges on two things: timing and paperwork. The six-month period runs from the date of supply, so a Dubai business needs to check that date against today's date before claiming — not simply assume enough time has passed because the invoice feels old. Notification to the customer should be a clear, dated written communication stating the amount written off, kept on file alongside the invoice, the write-off entry and proof the original output VAT was paid. Only once all of that is in place does the VAT amount go into Box 1 of the next VAT return as a negative adjustment, reducing that period's output tax payable rather than requiring a separate refund claim.
- Check the date of supply against the six-month rule before claiming.
- Notify the customer in writing, dated, stating the exact amount.
- File the notification alongside the invoice and write-off entry.
- Confirm the original output VAT was actually paid and reported.
- Claim the VAT amount only, in Box 1 of the return.
- File in the correct period, not whichever return is most convenient.
How a typical SME claim plays out
A Dubai consultancy invoices a client AED 210,000 including AED 10,000 VAT in January. The client pays half in March, then stops responding to reminders and calls through the summer. By September, with recovery efforts exhausted, the business writes off the remaining AED 105,000 — AED 100,000 net plus AED 5,000 VAT — in its accounts. Because more than six months have passed since the January supply, the business sends written notice of the write-off to the client and claims AED 5,000, the VAT on the unpaid portion only, as an adjustment in Box 1 of its next return. The AED 5,000 the client already paid is untouched, because that VAT was genuinely received and never at risk.
- The claim is calculated on the unpaid portion of a part-paid invoice.
- Recovery attempts (reminders, calls) support the write-off decision.
- The six-month test and the write-off both had to be satisfied.
- The paid portion of the invoice is never part of the claim.
Building bad debt relief into your VAT filing
For most Dubai SMEs, bad debt relief is not a one-off exercise but something that should run alongside every VAT return cycle, because new invoices keep crossing the six-month threshold and new debts keep getting written off. Exiloz builds a standing check into the VAT filing process: reviewing the aged-receivables list each period, flagging invoices that now meet the six-month test, confirming which have actually been written off, and preparing the customer notification where it has not yet been sent. That turns bad debt relief from something remembered occasionally into a routine part of getting every VAT return right, so recoverable VAT does not sit unclaimed on the books for years.
- Bad debt relief is checked every VAT filing cycle, not occasionally.
- Aged receivables are reviewed against the six-month threshold each period.
- Notifications are prepared as soon as a debt is written off.
- Recoverable VAT does not sit unclaimed for years at a time.
Related guides
Frequently Asked Questions
Common questions from Dubai owner-managed businesses chasing unpaid invoices.
When should a Dubai SME write off a debt?
When recovery efforts — reminders, calls, formal demand — have genuinely failed and the amount is realistically not going to be collected; you can then claim VAT relief once more than six months have passed since supply and the customer is notified.
What documentation do I need?
The original invoice and the return it was reported in, the write-off entry in the accounts, the date of supply establishing the six-month period, and dated proof of notifying the customer of the amount written off.
Can I claim before six months?
No. More than six months must have passed since the date of supply, regardless of how confident you are that the debt will never be paid — the time condition has no exception for certainty.
What if the client pays part of the invoice later?
The write-off and the VAT claim should be recalculated on whatever remains unpaid, and if a claim was already made on the full amount, the over-claimed VAT needs to be reversed for the portion that was actually received.
Does chasing the debt first affect the claim?
It does not change the legal conditions, but documented recovery attempts support the write-off decision and demonstrate the debt was genuinely pursued before being treated as bad, which is useful if the FTA ever reviews the claim.
How often should we check for unclaimed relief?
Every VAT filing period is a reasonable cadence — reviewing the aged-receivables list each cycle catches invoices as soon as they cross the six-month mark, rather than letting relief sit unclaimed for years.
Can Exiloz run our receivables VAT?
Yes. We track your aged debts against the six-month rule, confirm the write-off and notification evidence, and reclaim the VAT you are owed as part of your regular VAT filing.
Turn bad debts into VAT reclaims
Exiloz tracks your Dubai receivables against the six-month rule and reclaims the VAT you are owed as part of your regular VAT filing.