The FTA publishes its “VAT refund for building new residences by UAE Nationals” guide
United Arab Emirates (UAE) nationals are entitled to a refund of Value Added Tax (VAT) incurred on the construction of a new residence for own use. To claim this refund, applicants are required to submit a refund form to the Federal Tax Authority (FTA) via email along with supporting documentation. The documentation must evidence that the applicant owned the specific plot of land in the UAE on which the construction took place, the date the building was certified as completed, and the date the building was occupied (if available). Applicants will also be required to submit a copy their passport, Emirates ID and Family Book.
The refund form must be sent to the FTA within 6 months from the earlier of:
- The date the residence became occupied; or
- The date when it was certified as completed by a competent authority in the UAE
Once the FTA has successfully assessed the claim, the applicant will be notified with a reference number within 5 business days, and then must apply to a verification body authorized by the FTA to review the invoices and costs related to the claim. Verification bodies are third parties that have been approved by the FTA to perform a detailed review of the expenditure, invoices and VAT incurred in order to verify the VAT refund. Applicants will be required to provide the verification body with the FTA stamped refund form and reference number, the construction plan, and valid tax invoices issued in the name of the applicant. Simplified tax invoices will not be accepted.
The claimed expenses must relate to a newly constructed building which is to be used solely as a residence of the applicant and / or the applicant’s family. The expenses claimed must be in respect of:
- Services provided by contractors, including services of builders, architects, engineers, and other similar services necessary for the successful construction of a residence
- Building materials, being goods of a type normally incorporated by builders in a residential building or its site, but not including furniture or electrical appliances.
Goods are normally considered to be incorporated into a building when they are fixed in such a way that the fixing or removal of those goods would either require the use of tools, or result in the need for remedial work to the fabric of the building, or substantial damage to the goods themselves. A list of examples of the type of expenses which may or may not be claimed can be found at Appendix 2 of the guide.
The verification body will take no longer than 15 business days to process the request. The refund application will be processed by the FTA within 20 business days of receiving the report from the verification body, and if approved the FTA will make payment of the refund within 5 business days.
Please note that as the FTA has not yet published the list of verification bodies, applicants will not yet be able to submit refund claims to the FTA. As such, invoices and related documentation should be retained until such time as refunds can be submitted.