The new residence VAT refund scheme is applicable to UAE nationals who newly construct a building to be used solely as a residence by the person or his/her family. This is applicable when the person owns or acquires land in the UAE on which he builds or commissions the construction of his own residence. Under this scheme, such a person will be entitled to claim a refund of the tax paid on the expenses of constructing the residence.

 

Definition of Residence for VAT in the UAE

As per the FTA Guide (VATGRH1) issued in May 2021, the term residence means any building (including townhouses & villas) used mainly as a private home or a natural person (UAE national). The definition of residence includes fixtures and fittings belonging thereto and enjoyed therewith, which comprise at least cooking and washroom/bathroom facilities in addition to sleeping quarters.

 

Subsequent attachments to the residence or detached structures later built on the same plot won’t be considered as a residence for a VAT refund in the UAE.

 

Conditions to be eligible for this scheme?

  • The claim should be made only by a UAE national.
  • The claim should relate to a newly constructed building to be used solely as residence of the person or the person’s family.
  • The claim should not be made in connection with a building which will not be used solely as a residence by the person or his/her family.

 Expenses on which refund can be claimed?

  • Services provided by contractors, including services of builders, architects, engineers, and other similar services necessary for the successful construction of the residence.
  • Building materials, being goods of a type normally incorporated by builders in a residential building or its site. This does not include furniture or electrical appliances.

Deadline for Submitting the Application

Applicants are required to submit the refund request to the FTA within 12 months from the date of completion of the newly constructed residence which is the earlier of the date:

  • The residence becomes occupied;

or

  • When a UAE competent authority certifies that the construction of the building has been completed (the Building Completion Certificate).

The expenses on which refund of VAT paid can be claimed under this scheme are:

  • Services provided by contractors, including services of builders, architects, engineers, and other similar services necessary for the successful construction of the residence.
  • Building materials, being goods of a type normally incorporated by builders in a residential building or its site. This does not include furniture or electrical appliances.

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. They can reduce the expenditure incurred on account of VAT paid on the expenses of constructing the new residence. It is also a measure by the UAE Government to assist UAE nationals to construct residences. UAE nationals can note the conditions of this scheme and use it for their benefit.

If you have any queries regarding this new amendment, Get in touch with us. Please call 0557636758/ 04-2599055 or e-mail at info@hallmarkauditors.com