April 29, 2021 | By admin | As per the recent reports of the International Monetary Fund (IMF) projects the real GDP of the UAE as -6.6 percent for 2020. The main reason for the decline in the UAE economy has been the of low oil prices as the prices of the crude across the world declined considerably. In order to boost the economy and moderate the impact of COVID-19 the UAE government has recently introduced several policies and measures. Stimulus measures worth about 18 per cent of the GDP of the UAE were introduced in order to lessen the economic impact of COVID. The Emirates of Dubai and Abu Dhabi announced individual fiscal packages besides these relief measures to boost the economy. Foreseeing this situation The UAE introduced a scheme called ‘Bad Debts Adjustment’ in UAE VAT Law. Under this scheme a supplier is allowed to reduce his output liability in his VAT return and correspondingly, the recipient has to reduce his input VAT in his VAT return, for a period if the situation like this arises.But if the supplier wants to claim relief under bad debts scheme, there are a few conditions, which the supplier and the recipient have to meet.Let us discuss the conditions which are to be met for the registered supplier to reduce the Output Tax in a current tax period to adjust the Output Tax paid for any previous tax period:Merchandise and goods have been provided and the Due Tax has been charged and paid.Consideration for the supply has been written off in full or part as a bad debt in the accounts of the supplier.Over a half year have passed from the date that the supply was delivered.The supplier has notified the recipient of goods and services of the amount of Consideration for the supply that has been written off.If the above conditions met and the tax invoice is issued the amount receivable from the recipient is written off as bad debts, if 6 months have expired from the date of the supply. The interesting point to notice is that the supplier has informed the recipient about the amount which is written off as bad debts.If you have any query related to bad debt relief then feel free to call +971 4 4542366 today for a quality consultation or please send inquiry to info[at]flyingcolour[dot]com.Please Note: This article was published on 29th April 2021. The information provided in the article is based on the policies and rules applicable at the time of writing it. Talk to one of our consultants for any recent update or change.