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VAT Refund for UAE Nationals Building Residences

What is Value Added Tax (VAT)?

VAT (Value Added Tax) got effective in UAE on January 1st 2018 in order to provide UAE with an extra source of income for improvising public services. The rate of VAT is 5% in UAE.

What Does VAT Refund Mean?

The Federal Tax Authority of UAE has introduced a scheme under VAT for business visitors in which businesses can claim refunds on expenses they incur inside UAE.

What is VAT Refund for UAE Nationals?

UAE Nationals can claim a VAT refund when acquiring or building a residence inside UAE. Under certain criteria, the Federal Tax Authority of UAE provides a special refund on the supplies and certain expenses incurred while building a residence.

In this article we are going to discuss how the VAT refund procedure works in UAE.

How Does VAT Refund Procedure Work?

Any individual holding nationality of UAE while acquiring, owning, or building a land or home is entitled to submit a request for this special VAT refund under certain criteria. Through this request, they shall receive a refund on certain expenses incurred during the building of their residence.

  1. Go to FTA e-Services Portal
  2. Submit a New Residence VAT Refund Request
  3. Attach the supporting documents along with details of the property and applicant.

After following the above-stated steps, FTA will take time to review the submitted application and run a check to see if the applicant meets the eligibility criteria. FTA reserves the right to ask for additional documents for further verification.

Read also: VAT Refund for EXPO 2020

Who is Eligible for VAT Refund?

The VAT Refund in Dubai and in other emirates can only be claimed by an individual having UAE nationality and who holds a Family Book.

How to Claim VAT Refund in UAE?

For having the VAT refund application accepted and considered by FTA, it must follow the criteria below:

  • USAGE OF BUILDING– All expenses incurred in the construction of the building can be claimed for a refund if the building is intended to be solely used for the residence of the applicant or relatives.
  • NATURE OF EXPENSE– Expenses are incurred in the building material, goods that are incorporated in the building of the site, service charges by contractors, labor, architects, engineers, and other services which contribute to the building of the residence.

Applicant must know that furniture and electrical appliances are not reclaimable. However, VAT sustained on transport costs, import of material, and other agent fees can be claimed to the extent that they are directly connected for construction purposes only.

Here is a List of Goods That Are Not Considered by Fta for the Claim of Vat Refund:

  • Portable appliances
  • Swimming pools
  • Furniture and Décor
  • Landscaping and Horticultural Installation

Here is a List of Goods Which Are Considered by Fta for the Claim of Vat Refund:

  • Shower and Sanitary units
  • Central Air Conditioning and Split Units
  • Flooring (This does not include carpet and rugs)
  • Fire Alarms
  • Doors and Windows along with frame and glazing
  • Electrical installation inside the walls of the building (Wiring etc.)
  • Kitchen units (wall-mounted cupboards and working surface)

What Are the Supporting Documents Required for the Vat Refund Application?

An applicant must submit the following documents while filing an application for a VAT Refund for the building residence:

  • Copy of Emirates ID
  • Copy of Family Book
  • Proof of the building being occupied by the applicant (Electricity Bill, Water Bill)
  • Construction contract and certificate of completion by the municipality.

Please note that the refund claim form shall be submitted to FTA within 12 months effective from the date of completion of the residence.

What Happens if the Deadline for Submission of Application is Missed?

There can be various reasons which may cause an applicant to miss the 12 months period for submitting the refund application, however certain reasons can still be considered by FTA as exceptions.

An applicant must provide evidencing documents to ensure the verification, however, FTA still reserves the right to approve or disapprove.

The reasons could be:

  • The absence of the applicant from UAE due to a military task.
  • The absence of the applicant due to illness.
  • There is a legal dispute on the property or on anything related to the new residence.

Applicants must also note that any work or construction to the new residence that is done after the certificate of completion is issued will not be considered for the claim. Any further refurbishment within the occupancy period of 12 months but later the issuance of the certificate will be considered invalid for the refund.

VAT Refund in UAE - Need Assistance?

Understanding VAT refunds can be tricky and may lead an applicant to various confusion while filing refund claims. We at Farahat & Co provide our clients in Dubai an extended range of VAT refund guidance and solutions through our competent team of VAT consultants. We have a successful clientele of satisfied businesses for who we have provided streamlined and thorough consultancy in Dubai VAT refund procedures.

Read also: Documents Required for the Registration of VAT in Dubai UAE

Ervee is a CPA with international experience in Tax and Accounting. He has over 12 years of experience in accounting and bookkeeping and over a year in VAT implementation, registration, and accounting in UAE. He regularly drives out inefficiencies in company operations and loves the challenge of helping clients find additional ways for an easier and improved compliance and verification of transactions.