English text status

English translation published by the NBR in its bilingual Regulations file (marked unofficial). The Arabic text published in the Official Gazette remains the legal reference in the event of any discrepancy.

Practical summary

Bad-Debt VAT adjustment requires necessary collection measures, write-off in the records and non-payment for at least 12 months, unless bankruptcy is established. The Customer reduces previously deducted Input VAT in the Supplier-adjustment period. Later collection produces a further Net Tax adjustment in the collection period.

Who should read this?

Credit, collections, receivables, payables and Return teams.

Why does it matter?

Twelve months or write-off alone is insufficient. Supplier Output VAT and Customer Input VAT move together and later recovery reverses the result proportionately.

Collection measuresWritten off12 months or bankruptcyCustomer adjustmentLater recovery

Current text

A. If the Consideration for a Supply is not paid in part or in full, the Tax amount may be adjusted in accordance with the following conditions: 1. The Taxable Person shall prove that he has taken all necessary measures to collect the debt. 2. The debt must be written off in the records of the Taxable Person as a Bad Debt, in whole or in part. 3. The debt must not have been collected for a period of twelve months or more, with the exception of non-payment due to bankruptcy. B. The Customer shall reduce the recoverable Input Tax in the Tax Period in which the Tax was adjusted in respect of the Taxable Person’s Bad Debt in accordance with.) Paragraph A of this Article. C. Where the debt is collected in whole or in part at a later date, the Net Tax shall be adjusted within the Tax Period during which during which the debt is collected.

Bad-debt file

  1. 1

    Evidence due and unpaid debt.

  2. 2

    Document suitable collection action.

  3. 3

    Evidence accounting write-off.

  4. 4

    Count 12 months unless bankruptcy.

  5. 5

    Coordinate Supplier and Customer adjustments.

  6. 6

    Track later recovery.

Connected provisions

Direct legislative link

Law — Article (28)

Bad debt

Article 30 supplies the conditions.

Open connected Article
Direct legislative link

Regulations — Article (32)

Adjustment implementation

It links adjustment event, period and documents.

Open connected Article

Official guides and tools

Official text

VAT Executive Regulations

Article (30)

Connected Madar tools

Connected Madar tools

VAT Return Centre

Check return deadlines, calculate net VAT from entered amounts, and identify a correction route.

Illustrative example by Madar

Debt unpaid for 12 months, then BHD 300 recovered

A debt remains unpaid for 12 months after suitable collection action and is written off. The Supplier may adjust when all conditions are met and the Customer reduces deducted Input VAT. If BHD 300 is later collected, Net Tax is adjusted for that amount in the recovery period.

Questions to help you apply it

  • Collection action?
  • Write-off date?
  • 12 months complete?
  • Bankruptcy?
  • Customer adjusted?
  • Later recovery?