By Parag Deulgaonkar
Emiratis allowed to reclaim VAT when building new house, says ministry
The UAE will have no special value added tax (VAT) rules for small and medium-sized enterprises (SMEs), according to the Ministry of Finance (MoF).
Last week, the ministry said certain financial services, residential properties, bare land and local passenger transport services will be exempt from 5 percent VAT, which will come into effect from January 1, 2018.
The SME sector, which makes up 90 percent of registered companies in the UAE, has been facing the impact of economic slowdown for the past two years. In 2016, the UAE Banks Federation launched an initiative to help SMEs restructure nearly $1.90 billion (AED7bn) of loans.
In an update on its website, the ministry said the Federal Tax Authority will, however, provide materials and resources available for these entities to assist them in their enquiries.
Separately, the MoF will launch a scheme to allow Emiratis to reclaim VAT paid on goods and services relating to constructing a new residence which will be privately used by the person and his family.
Under the scheme, nationals will be able to recover VAT on expenses as contractor’s services and building materials, the ministry said.