VAT & Construction
Retention Money and VAT:
When Is the Tax Really Due?
On construction and other long-term contracts, the client holds back a portion of each payment as retention, usually released about a year after the work is finished. It is easy to assume the VAT on that money waits until it is released. Under the UAE date of supply rule in Article 26, it often does not: the tax can fall due on the full certified value, including the retention, before the cash reaches you. This short video explains the rule and what it means for your cash flow.
Article 26
UAE date of supply rule
Full Certified Value
Retention may still form part of the taxable value
Cash Flow
VAT may become due before the retention is received
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Watch the short video
Watch time: [3 min 43 sec]
