Interim payment certificate calculator
A UAE progress invoice starts from the value certified for the period, deducts the share of the mobilisation advance being recovered, and charges 5% VAT on what remains. Retention is then held back from the payment. If VAT on retention is deferred, the retention also comes off the taxable value and its VAT is charged when it is released.
The steps on every certificate
The calculator follows the same order as SupaJack Construct when it raises an invoice from a payment certificate: certified value, less advance payment recovery, VAT at 5%, then retention held from what is paid. The advance was already invoiced and taxed when it was received, so its recovery is not taxed again.
| Line | VAT on full certified value (default) | VAT on retention deferred to release |
|---|---|---|
| Certified | 1,056,000.00 | 1,056,000.00 |
| Less advance recovered (10%) | 105,600.00 | 105,600.00 |
| Less retention (5%) before VAT | none | 52,800.00 |
| Taxable value | 950,400.00 | 897,600.00 |
| VAT 5% | 47,520.00 | 44,880.00 |
| Invoice total | 997,920.00 | 942,480.00 |
| Less retention held from payment | 52,800.00 | none |
| Payable now | 945,120.00 | 942,480.00 |
When VAT is due on progress payments
The FTA treats construction with stage payments, advances and retentions as a continuous supply under Article 26 of the VAT Decree-Law. The date of supply is the earliest of a tax invoice being issued, the payment due date shown on it, or payment being received, and a certificate on its own does not trigger VAT. If none of those happens, VAT is triggered 12 months after the work was provided. Retention follows the same rule: VAT is due at the earliest of the retention being paid, an invoice for it, or 12 months after the work is signed off as complete.
Where the figures come from in SupaJack Construct
The application ties each interim payment application to its inspections, refuses to invoice until a certificate exists, reads the retention and advance percentages from the project's own payment terms, and posts the invoice to the ledger in the same step. See the money trail, try the certificate on the home page, or use the gratuity calculator, overtime calculator, annual leave calculator, unpaid leave calculator, payment certificate calculator and retention calculator.
Worked example
A fit-out contractor is certified AED 1,056,000 this month. The contract recovers the advance at 10% and retains 5%. Under the default setting the taxable value is 1,056,000 − 105,600 = AED 950,400, VAT is AED 47,520 and the invoice is AED 997,920. The client holds back AED 52,800 retention, so AED 945,120 is payable now.
Questions people ask
Is VAT charged on retention in the UAE?
Yes. VAT on retention is due at the earliest of its payment, a tax invoice for it, or 12 months after the work is certified complete.
Does a payment certificate trigger VAT?
No. The FTA says certification alone does not trigger the date of supply, but it often sets a payment due date that does.
Why is the advance recovery not taxed again?
The advance was invoiced and taxed when it was received, so recovering it on later invoices reduces the taxable value instead.
What VAT rate applies to construction in the UAE?
The standard rate of 5%, with specific exceptions such as the first supply of certain residential buildings.
What is the difference between the two VAT settings?
By default VAT is charged on the full certified value less the advance. With deferral, retention is left out of the taxable value and its VAT is charged on the release invoice.
Which setting should we use?
Follow your tax adviser and contract. SupaJack Construct lets you choose and then locks the choice once the first progress invoice posts, so returns stay consistent.
How much retention is usually held?
It is set by the contract, commonly a fixed percentage of each certificate. The calculator lets you enter your contract's rate.
How much of the advance is recovered each time?
Also set by the contract, usually a percentage of each certificate until the advance is fully recovered.
What happens if no certificate is issued?
SupaJack Construct will not raise the invoice; the application waits until a certificate exists.
Can the client pay less than the certificate?
The payable amount is the invoice less retention. Other deductions such as back-charges are contract matters outside this calculator.