Construction accounting is built around the project rather than the calendar month — revenue is often recognised over the life of a contract, retention amounts are held back until project milestones or defects-liability periods pass, and subcontractor arrangements add another layer of VAT and payment complexity. Our construction industry service brings this project-based approach into your VAT, Corporate Tax and accounting rather than forcing a generic monthly-revenue model onto a business that doesn’t work that way.
Common Challenges We Solve
Recognising revenue accurately over the life of long-term contracts rather than only at invoicing or cash receipt. Tracking retention amounts separately from regular receivables, since they’re held back for extended periods and need correct treatment in both VAT and financial reporting. Managing subcontractor payments and VAT correctly, including retention held against subcontractors themselves.
We also help contractors track claims and disputes with clients or subcontractors, since these can materially affect both cash flow and reported project profitability until resolved.
VAT & Tax Considerations for Construction
VAT on construction contracts generally follows standard invoicing rules, but timing can be complicated by milestone billing, retention, and variations to the original contract scope. For Corporate Tax, percentage-of-completion or similar revenue recognition methods need to be applied consistently and defensibly across multi-year projects.
Getting revenue recognition right consistently across projects also matters if the company is ever preparing for a bank facility, an audit, or a sale, since inconsistent treatment raises questions during due diligence.
Our Services for Construction
VAT registration and filing that correctly handles milestone billing and retention, Corporate Tax compliance for multi-year project revenue recognition, External Audit for statutory or bank requirements, and Fixed Assets Services for tracking heavy equipment and machinery.
Who We Work With
General contractors, specialist subcontractors, fit-out companies, and construction project management firms operating across UAE mainland and free zones.
Getting Started
Share details of your typical project structure and contract terms, and we will confirm the right revenue recognition and VAT approach for your business.
Variation Orders and Change Management
Construction projects frequently involve variation orders that change scope, cost and sometimes timeline after the original contract is signed. We track these variations separately, ensuring they’re correctly reflected in both revenue recognition and VAT treatment rather than blended indistinguishably into the original contract value.
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Joint Ventures and Consortium Projects
Larger construction projects are sometimes delivered through a joint venture or consortium structure, which raises specific questions about revenue and cost allocation between partners. We help structure the accounting for these arrangements so each party’s share is clearly and defensibly calculated.
Retention Release and Defects Liability Tracking
Construction retention is often only released after a defects liability period has passed without issue, sometimes a year or more after project completion. We track retention release dates specifically, so amounts held back aren’t forgotten or written off incorrectly before they’re actually due.
Bid and Tender Cost Tracking
Construction companies invest meaningfully in preparing bids and tenders, many of which are unsuccessful, and tracking these costs separately gives better visibility into true business development cost versus project delivery cost. We help build this visibility into your cost accounting.
Advance Payment Guarantees and Performance Bonds
Construction contracts often require advance payment guarantees or performance bonds, which represent contingent obligations that need appropriate disclosure and tracking even though they don’t sit directly on the balance sheet as a liability in the usual sense. We help ensure these are properly documented and monitored.
Materials Procurement and Supplier Payment Terms
Construction companies managing large materials procurement across multiple suppliers on different payment terms need a clear cash flow view of upcoming obligations. We build procurement and payables tracking that gives you this visibility ahead of when payments actually fall due.
Health, Safety and Insurance Cost Allocation
Construction companies carry significant health, safety and insurance costs that are sometimes billed directly to a project and sometimes absorbed as general overhead, and getting this allocation consistent matters for accurate project-level profitability. We help apply a consistent method across your project portfolio.
We also help ensure insurance claims related to site incidents are tracked and reconciled against any recoveries received, rather than left as an open item.
Frequently Asked Questions
VAT is generally due at the earlier of invoice issuance or payment for each milestone, so accurate milestone tracking is essential to correct VAT timing.
Retention is typically recorded as a receivable until released, with VAT treatment depending on when the underlying invoice was raised — we confirm the correct approach for your contracts.
Yes — we apply appropriate revenue recognition methods for long-term contracts and ensure they’re applied consistently for Corporate Tax purposes.
Yes — our External Audit service delivers independent, bank-accepted audited financial statements for construction companies.
Yes — our Fixed Assets Services build and maintain a proper register for equipment and machinery, including appropriate depreciation.