Federal Tax Authority and Dubai Land Department say 85% of deals are not subject to new 5% tax
The Federal Tax Authority (FTA) and Dubai Land Department (DLD) have confirmed that the UAE’s recently introduced VAT will have a limited impact on the real estate sector.
They said that all real estate transactions, with the exception of the sale of vacant commercial properties and commercial property leases, will be either not subject to or exempt from the 5 percent VAT.
They calculated that 85 percent of components in Dubai’s total real estate sector are not subject to the 5 percent VAT.
Khalid Ali Al Bustani, director general of the FTA, stressed that the UAE tax system has been designed to support the real estate sector in all its activities.
Sultan Butti bin Mejren, director general of DLD, added: “85 percent of components in Dubai’s total real estate sector are not subject to the 5 percent VAT. When reviewing the details of sales, rents and other transactions, we found that the value of bare land sales, residential properties, and occupied commercial and retail properties comprise the largest percentage of total properties traded during 2017.
"This ratio is expected to remain over the coming years and even stands to increase with commercial offices continuing to improve their leasing operations and minimise empty units."