Subcontractor payable calculator
The subcontractor invoices the work certified less any advance recovered, plus 5% VAT. From that the main contractor holds retention, limited by any cap on the subcontract sum, and deducts back-charges. What remains is the net payable. The steps follow the payment certificate calculator.
The steps
This calculator uses the same order as the payment certificate calculator: certified value, less the advance recovered, VAT at 5% on what remains, then retention held from the payment. It adds two things subcontracts often have. Retention can be capped as a percentage of the subcontract sum, with retention already held counted against the cap. Back-charges are deducted from the payment in AED.
Retention is the certified value × the retention percentage, limited to the room left under the cap: the cap amount less the retention already held. A blank cap means no cap. A cap typed as 0 means no more retention can be held. The retention is held from the payment and does not reduce the taxable value, which is the default treatment in the payment certificate calculator.
| Step | Working | Amount (AED) |
|---|---|---|
| Certified this period | Entered | 300,000.00 |
| Less advance recovered | Entered | 30,000.00 |
| Taxable value | 300,000 − 30,000 | 270,000.00 |
| VAT 5% | 270,000 × 5% | 13,500.00 |
| Invoice total | 270,000 + 13,500 | 283,500.00 |
| Retention wanted | 300,000 × 5% | 15,000.00 |
| Retention cap room | 1,200,000 × 5% = 60,000, less 50,000 held | 10,000.00 |
| Retention withheld | The smaller of 15,000 and 10,000 | 10,000.00 |
| Back-charges | Entered | 4,000.00 |
| Net payable | 283,500 − 10,000 − 4,000 | 269,500.00 |
VAT treatment and back-charges
The FTA's Real Estate VAT guide says there are no special date-of-supply rules for retention and that construction services are taxed at 5%. The Decree-Law imposes the 5% rate. Back-charges here come off the payment and do not change the VAT. How a back-charge is documented for VAT depends on your contract, so ask your tax adviser. The advance is not taxed again because it was invoiced when received.
Where it fits
In SupaJack Construct subcontract certificates are measured against the subcontract's BOQ lines, in projects and tenders, and retention, advance recovery and VAT on each invoice come from the project's payment terms in interim payments. Read the interim payments guide, the retention and advance payment entries. Related calculators: payment certificate calculator, retention calculator, advance payment recovery calculator, VAT calculator, variation order calculator, extension of time calculator, delay damages calculator, bank guarantee cost calculator, price escalation calculator, BOQ line total calculator.
Worked example
A subcontract is worth AED 1,200,000. This period AED 300,000 of work is certified and AED 30,000 of advance is recovered, so the taxable value is AED 270,000, VAT is AED 13,500 and the invoice is AED 283,500. Retention at 5% would be AED 15,000, but the cap is 5% of the subcontract sum, AED 60,000, and AED 50,000 is already held, so only AED 10,000 is withheld. After AED 4,000 of back-charges the net payable is AED 269,500.
Questions people ask
What is the net payable to a subcontractor?
The invoice total including VAT, less the retention withheld and any back-charges.
How is the retention cap applied?
The cap is a percentage of the subcontract sum. Retention already held counts against it, and only the room left can be withheld.
What if there is no retention cap?
Leave the cap blank. Retention is then the full percentage of the certified value.
Is VAT charged on the retention?
In this calculator retention is held from the payment and VAT is charged on the certified value less the advance. VAT on retention follows the FTA rule on the date of supply.
Is the advance taxed again when recovered?
No. The advance was invoiced and taxed when received, so recovery reduces the taxable value.
How are back-charges treated?
They come off the payment in AED and do not change the VAT here. Ask your tax adviser how yours are invoiced.
Can the net payable be negative?
Yes if deductions exceed the invoice. The calculator says so.
Where do the percentages come from?
From your subcontract. The calculator carries no default retention rate from any law.
Does it match the payment certificate calculator?
Yes for VAT and retention. It adds the retention cap and back-charges.
How does SupaJack Construct handle subcontract certificates?
They are measured against the subcontract's BOQ lines, and retention and advance recovery come from the project's payment terms.