Thursday 28 January 2021

VAT refund procedures simplified for UAE home buyers

DUBAI, October 16, 2018

The UAE's Federal Tax Authority (FTA) has simplified the procedures to reclaim value added tax (VAT) for Emirati nationals who are building new residences, according to a report.

The FTA stressed the need for citizens who apply for VAT refunds from the construction of new housing to ensure that all forms related to the request for recovery are completed accurately and that all the required information is included in the requests, to allow the commission’s specialists to process applications within the set time limits. It also called on UAE nationals to view the user guide, which is available on its official website.

Announcing the new measures, director-general Khalid Ali Al Bustani said: "The FTA is committed to adhering to the vision of the UAE’s wise leadership to develop a modern housing system and to deliver the best standards of life and well-being within the framework of care that the state provides, as the focus of development plans and as part of the basic objectives of all initiatives and projects carried out by state institutions."

"For us at FTA, the happiness of UAE citizens is the top priority. We are committed to implementing our services through the most advanced, innovative, and easy-to-use digital systems," he stated.

"The FTA is introducing tax legislation that reflects the government’s directives to ensure the well-being of UAE citizens. With this in mind, we have provided a clear and transparent set of standards and criteria to facilitate VAT recovery on the building of new residences by UAE nationals," he added.

Given the leadership's keenness on ensuring housing stability for all segments of society, the UAE legislator said he has taken special care not to raise the burden on the UAE's citizens and residents. The supply of commercial real estate (sale or rent) is subject to the basic rate of VAT five per cent, except during the first three years of construction, when it is subject to 0 per cent.

He pointed out that supplying a housing unit for the first time within the first three years of construction is subject to zero-rated VAT. All subsequent supplies of the same unit are exempt from tax, even if the supply is also made within the first three years of completion, said the top official.

This is meant to equalise VAT treatment for home builders, as a result of which UAE nationals can now refund VAT incurred in the construction of new residential units, he noted.

Al Bustani also said the authority has identified specific criteria and documents that must be attached to requests to reclaim VAT, to ensure that the recovery from the construction of new housing is provided only to citizens who meet the conditions. He added that accurate procedures were being implemented to prevent any attempts to evade taxes.

Al Bustani said the refund procedure, which can be completed on the FTA website, has three key conditions: The applicant must be an Emirati national, the monetary cost in question must have gone towards financing the construction of a new home to be used exclusively as a residential unit for the applicant and/or their family, and the VAT refund only includes the money spent on constructing the unit, such as the amount paid for building materials.

The FTA also reiterated that the request must be submitted within six months of the date of completion of construction, which precedes the date of occupancy of the building, it added.-TradeArabia News Service

Tags: VAT refund | procedures |

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