How to account for event deposits and VAT in the UAE without surprises

When a client pays a deposit for an event that has not happened, you have not earned it. Book it to a liability account, usually “customer deposits” or “deferred income – events”, and leave it there until the event is delivered. Revenue for a single-day event is recognised on the event date. For a multi-day exhibition, recognise it across the days delivered.

Our point of view is blunt: event companies that put deposits straight to sales are running their business on a misleading P&L. They see a strong first quarter, hire for it, and then discover in the autumn that the cash was already spent.

Article 25 of the VAT Decree-Law sets the date of supply as the earliest of several events, including the date payment is received and the date a tax invoice is issued. A deposit received for a taxable event therefore normally triggers output VAT on the amount received, in the period it arrives, not when the event takes place.

Treat the deposit as VAT-inclusive unless your contract says otherwise. If you receive AED 84,000 against a quoted AED 200,000 plus VAT, the VAT inside the deposit is AED 84,000 × 5/105 = AED 4,000. Issue a tax invoice for the deposit within 14 days, as Article 67 requires, so the client can recover its input tax and your records line up.

Some contracts include a genuinely refundable security deposit, for example against damage to hired furniture, that is returned in full if nothing goes wrong. Whether VAT applies to that kind of deposit depends on the facts. Ask a tax agent before you leave VAT off it.

Quote: AED 200,000 plus VAT AED 10,000, total AED 210,000. Deposit of 40% (AED 84,000) received 15 February. Balance of AED 126,000 invoiced on the event date, 20 May.

• 15 Feb: debit bank AED 84,000; credit customer deposits AED 80,000; credit VAT output AED 4,000
• March to May: venue, catering and AV bills post to a work-in-progress or event cost account tagged to the project
• 20 May: debit accounts receivable AED 126,000; debit customer deposits AED 80,000; credit event revenue AED 200,000; credit VAT output AED 6,000
• Result: AED 4,000 VAT in Q1, AED 6,000 in Q2, and the full AED 200,000 of revenue in May beside its costs

Postponement is the easy case: the deposit stays in the liability account and the project date moves. Cancellation is harder. If you refund the deposit, issue a tax credit note, reduce output VAT in the period of the credit note, and pay the money back. Article 62 requires the credit note within 14 days of the event that triggers it.

If the contract lets you keep part of the deposit as a cancellation fee, the retained amount becomes income. Whether it remains consideration for a taxable supply or is treated differently depends on the contract wording and the FTA’s view, so record what the contract says, keep the correspondence, and let your tax agent confirm the VAT position before you adjust the return.

Event companies live or die by job margin. Tag every quote, deposit, supplier bill and staff cost to the event as a project or class. Then the question “what did the Emaar launch actually make?” has an answer that does not depend on memory.

HelloBooks’ AI agent reads supplier bills in English or Arabic, suggests the event tag from the PO or description, and posts the deposit to the liability account when the bank line arrives. Ask it “which events have deposits but no supplier costs yet?” and it lists them. You still approve each bill and the revenue release on event day.