The Federal Tax Authority (FTA) has set three requirements and procedures for Emiratis to receive a refund for the Value Added Tax (VAT) charged on new residences.
The conditions state that in order to refund VAT, applicants must be an Emirati; the monetary cost in question must have gone towards financing the construction of a new residence, set to be used exclusively as a residential unit for the applicant and/or their family; and finally, the VAT refund only includes the money spent on establishing the unit, such as the amounts paid as building materials.
The FTA issued a comprehensive guide that clarifies the VAT refund process, publishing it on its official website https://www.tax.gov.ae/
In a press release issued on Saturday, the Authority explained that UAE citizens have the right to recover VAT when constructing their own residences and should submit a request to recover the tax incurred on construction costs from the FTA. The request must be submitted within six months from the completion date of the construction project, which precedes the date of occupancy of the building, or the date of issuance of a certificate of completion for the building by the competent authorities, or another date determined by the Federal Tax Authority, which ever comes first.
The Authority will be announcing all accredited Verification bodies on its website. These entities can issue an official document called “Verification Report” stating the amount of taxes paid versus the recoverable amount, and then send it to the FTA within 15 working days from the date the invoices were issued. The Federal Tax Authority can then 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 Federal Tax Authority confirmed that no fees apply on requests for VAT recovery on the construction of new housing units, noting that there are fees charged by the accredited Verification bodies in return for the services they provide.