Built to inform

Sign up for the daily newsletters

No, Thank you

VAT exemptions announced for residential units in UAE

Residential units in the UAE will be largely exempt from value added tax (VAT)

The rent or sale of a residential part of the building shall be treated as zero-rated or exempt.
The rent or sale of a residential part of the building shall be treated as zero-rated or exempt.

Residential units in the UAE will be largely exempt from Value Added Tax (VAT), with the exception of the first supply of a new residential building within the first three years of its construction, according to a statement by the Federal Tax Authority, FTA.

The supply of commercial real estate, selling or leasing, will be subject to the Value Added Tax, VAT, at 5% from 2018.

The rent or sale of a residential part of the building shall be treated as zero-rated or exempt, depending on whether this is a first supply or a subsequent supply, the statement said.

The rent or sale of a commercial part of the building, however, shall be treated as subject to VAT at 5%.

 

The first supply of a new residential building within the first three years of it being constructed shall be zero-rated. All subsequent supplies shall be exempt, even if within the first three years.

The owner of any building that is not residential will have to register if the value of the supplies over the preceding 12 months exceed $102,096 (AED375,000) in value, or if it is expected that they will exceed the amount over the coming 30 days.

The FTA explained that owners of residential buildings do not register for VAT if they do not have any other business activities.

Owners who do have other business activities, however, must check to see whether or not they are required to register.

The tax incurred by the owner on the building needs to be apportioned where there is an exempt supply, and the portion related to the taxable supply (at 0% and 5%) may be recovered.

Most popular

Awards

Construction industry conversations around digitisation must evolve
The Middle East construction industry’s approach to tech must evolve and focus on how can

Conferences

CW In Focus | Inside the Leaders in KSA Awards 2019 in Riyadh
Meet the winners in all 10 categories and learn more about Vision 2030 in this
CW In Focus | Leaders in Construction Summit UAE 2019
A roundup of Construction Week's annual summit that was held in Dubai this September

Latest Issue

Construction Week - Issue 753
Nov 09, 2019