Refund for UAE Nationals Building New Residences

Table of Contents

The new amendment is applicable to those UAE nationals who owns or obtain a land in the UAE and on which he builds or commission the construction of a new residential building to be solely used by that person or his/her family.

This scheme helps those nationals to claim refund on the tax paid on specific expenses incurred on the construction of the residence. To claim refund, it would be beneficial to reach out to Tax Consultants firms in Dubai UAE.

One of the key changes in the amendment is in the definition of ‘residence’ which clarifies previous confusions on the scope of the term ‘residence‘, helping the UAE Nationals to determine the eligibility easily.The term ‘residence’ according FTA refers to any building used as a private home of a natural person, including fixtures and fittings belonging thereto and enjoyed therewith. But it also states that any further attachment to the residence won’t qualify as a residence and thus can’t be eligible for a VAT Refund. E.g. When a playroom is added to the residence, VAT not recoverable under this scheme whereas, when a second house with cooking, washroom, and sleeping facilities is built in same plot, the VAT on the expense of construction of the same can be recovered.

The application of refund should be made within 6 months of completion of the newly built residence which is the earlier of: the residence becomes occupied, or when the Building Completion Certificate is obtained.

FTA upon their discretion,can extend the 6-month period for some special cases which is mentioned in the FTA

  1. When the national can’t submit the refund due to involvement in military service or due to illness.
  2. When there is any legal dispute to the new residence.
  3. Due to some technical issue which made the residence not to occupy even after obtaining the Completion Certificate.

Most of the services provided by the contractor and other major expense like building materials qualify for a VAT Refundable expense under this scheme. In cases when a person who had claimed refund for construction of a residential property, later turned the same into commercial, the person is supposed to repay the tax that was refunded.

Under this new scheme, the UAE Government assists the UAE Nationals who construct new residence by reducing their expenditure incurred on account of VAT paid for the construction expenses. UAE Nationals can benefit from this scheme and can save cost.

Conclusion

The UAE VAT Law permits UAE Nationals to demand a special refund from the FTA for the VAT acquired on specific costs identified with the development of a new residence, subject to specific conditions as endorsed by the Law.As per the refund process, the demand for the refund ought to be submitted for the FTA audit and endorsement through the e-Services portal alongside the mentioned supporting documentation, including the details of the candidate and property. A UAE National may just submit one unique refund request for each new residence, excluding the retention payments where an extra application might be submitted. If you have any queries regarding this new amendment, Get in touch with us.

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