Value added tax (VAT) in UAE is covering most of the sectors in the country. But there are also few exceptions from this newly implemented tax. One such area is the residential homes. Recently, the FTA (Federal Tax Authority) has announced the procedure for UAE nationals through which they can refund VAT for newly constructed residences.
According to details, there are three conditions that need to be met for refund of VAT on the construction of new homes. These three conditions are:
- The applicant must be a UAE national.
- The cost for which the refund is asked must be used for the construction of residential building with the purpose of providing residence to the applicant and/or his/her family.
- The VAT refund will only be included for the money spent on construction of the building (e.g. the money paid on building materials or construction workers etc.).
The authority further clarified that the application must be submitted within six months after the completion of the construction of the residential building. It means the application date is related to completion of the construction project and it is not affected by occupation of the building. FTA told that the purpose of this tax exemption for housing sector is to provide assistance in the development of a modern and steady housing system in the country.
There are total 4 steps in the process of application submission to claim VAT refund.
- In the first step, the applicant will download VAT refund form from the official website of FTA.
- Then the applicant will completely fill, signed and print the form.
- Now scan the form and submit it in PDF on homebuilders@tax.gov.ae along with all supporting documents (passport, Emirates ID, ownership of land etc.).
- Eligible candidates will submit the request to a verification body recognized by the FTA. This request will include reference number, invoices and blueprints. FTA will take its due time to complete the process and refund the recoverable amount to the applicant.
This step by the government to exempt residential homes from VAT is certainly in favor of the construction sector. Builders and real estate agents will surely benefit from such step and they can take full advantage of this facility by setting up their business in Dubai and any other part of UAE. For further information and complete assistance in this regard, you can contact Riz & Mona Consultancy via our WhatsApp # 971-56-9971225 or email address info@rizmona.com. We provide best solution to all new and existing businesses in UAE.
