What is output tax? The VAT you charge and owe to the FTA

Article 3 of Federal Decree-Law No. 8 of 2017 imposes the 5% standard rate on taxable supplies. The tax becomes due on the date of supply, which Article 25 sets as the earliest of the listed events, including delivery, completion of a service, receipt of payment or the issue of a tax invoice. Article 19 of the Executive Regulation makes tax due to the extent of a payment received or stated on an invoice.

Article 64(5) of the Executive Regulation lists standard-rated and zero-rated supplies and their output tax among the minimum contents of a return.

Because output tax follows the date of supply, a business can owe VAT on sales its customers have not paid yet. A Sharjah wholesaler invoicing AED 400,000 in the last week of March owes AED 20,000 of output tax in the March quarter even if the customers pay in May. Cash planning has to allow for this.

When a sale is cancelled or goods come back, Article 61 of the Decree-Law requires output tax to be adjusted, and Article 62(2) requires a tax credit note within 14 days where the tax was overstated. For customers who never pay, Article 64 allows a bad-debt adjustment once more than six months have passed since the supply and the amount has been written off, subject to the other conditions.

Every sales invoice in HelloBooks posts output tax by line, with the treatment and emirate recorded, so the draft return builds as you trade. Deposits matched from your bank statement can be recorded as advances with their VAT. Credit notes reverse output tax in the period they are issued. Ask the AI agent 'how much output VAT have we charged this quarter so far?' and it answers with a breakdown by emirate and treatment.

Terms that shape the output side.

• Input tax
• Date of supply
• Tax credit note
• Taxable supply
• VAT 201