The rules apply to UAE nationals who hope to recover the amount used to finance construction of new residences
The UAE’s Federal Tax Authority has issued new requirements for UAE nationals to refund value added tax (VAT) on new residences.
As per the newly announced conditions, the applicant must be a UAE national and the monetary cost in question must have been used to finance construction of a new residence used exclusively for the applicant and their family.
Lastly, the FTA has clarified that the VAT refund only includes the money spent on establishing the unit, such as the amounts paid as building materials and other materials used by construction contractors, rather than on things like furniture and appliances.
To complete the VAT refund process, eligible UAE nationals need to first submit a request to recover the tax incurred on construction costs from the FTA. The request must be submitted within six months of the project’s completion – which precedes the building’s date of occupancy – or the date of issuance of a certificate of completion.
“The authority has been providing transparent standards, procedures and mechanisms to ensure seamless procedures for citizens looking to recover value added tax incurred on the construction of new residences,” said FTA Director General Khalid Ali Al Bustani.
“This, in turn, leads to achieving the vision of our wise leadership to develop a modern, stable housing system in the UAE.”
Submitting the request for a VAT refund is a four-step online procedure that begins with the downloading of a VAT refund form from the FTA website, which must then be filled out, printed and signed.
Once completed, the form and any supporting documents – such as Emirates ID and ownership paperwork - must be submitted in PDF format to email@example.com within six months of the completion of construction work.
Applicants will be sent an e-mail confirming that the FTA has received the documents, as well as another e-mail within five working days confirming whether or not the applicant is eligible for a refund. Those declared eligible to recover VAT will need to provide the reference number issued by FTA.
The final step is for eligible applicants to submit the request, including the reference number, blueprints and invoices to a verification body accredited by the FTA. Those verified bodies – which will be listed on the FTA website – will then send a report stating the amount of taxes paid versus the recoverable amount, which will then be sent to the FTA within 15 working days.
According to the FTA, it will take up to 20 working days to process the final request, and then an extra five working days to refund the recoverable amount to the applicant.
The FTA has also confirmed that no fees apply to requests for VAT recovery on the construction of new housing units, even though there are fees that will be charged by the accredited verification bodies.