Retention accounting construction UAE contractors can track to release

You ask in plain English, the AI does the bookkeeping work, and you or your accountant approve the result.

• You ask: “How much retention is owed to us across all projects, and which amounts are due for release this quarter?”
• The AI agent: The AI totals the retention receivable account by project and client, reads the handover and defects dates you stored on each project, and lists amounts that fall due in the quarter.
• You review: You confirm the completion certificates and defect status with the project team, and approve the release invoices before they are sent.

Retention receivable is money your client holds back from you. Retention payable is money you hold back from subcontractors. Both sit on the balance sheet, and both should be tagged to a project so you can see what each job is still owed or still owes.

• Retention receivable: part of each payment certificate, released at handover and end of defects period
• Retention payable: deducted from subcontractor invoices, released on their own terms
• Project tags on every retention entry
• Release date noted on the project so the AI can remind you

How VAT applies to retention depends on how you invoice. Some contractors invoice the full certified amount including retention and collect the retained part later; others invoice only the net amount now and the retention at release. For periodic payments, Article 26 of the VAT law sets the date of supply as the earliest of the invoice date, the payment due date on the invoice, the payment date, or one year after the supply.

Because the right answer depends on your contract and invoicing, agree the method with your tax agent, then set it up once. HelloBooks applies it consistently, and the AI flags a certificate where the VAT does not match your chosen method.

Certificate 4 on a Dubai South warehouse is AED 500,000 of work. Under the contractor's agreed method, it invoices the full AED 500,000 plus AED 25,000 VAT. The client pays AED 475,000 now, holding AED 50,000 of retention. The AI posts AED 50,000 to retention receivable for that project.

The same month, a subcontractor bills AED 80,000 plus AED 4,000 VAT, and you hold 10 per cent, AED 8,000, in retention payable. A year later, after the defects period, the AI lists both for release. If you need a retention report for your bank or surety, a custom report can be requested through hello@hellobooks.ai.