When is the VAT refund available?
Where a UAE citizen owns or acquires land in the UAE on which the person builds or commissions the construction of his own residence, he shall be entitled to make a claim to the FTA to repay the VAT on the expenses of constructing the residence. The claim may only be made by a natural person who is a UAE national.
Conditions for the special VAT refund
In order to claim a refund of the VAT incurred on the construction of a residence, the following conditions must be met15:
- The claim may only be made by a natural person who is a UAE national;
- The claim must relate to a newly constructed building to be used solely as the residence of the person or the person’s family; and
- The claim may not be made in connection with a building that will not be used solely as a residence by the person or the person’s family, for example if it is to be used as a hotel, guest house, hospital or for any other purpose not consistent with it being used as a residence.
The refund claim must be lodged with the FTA within 12 months from the date of completion of the newly built residence.
Costs which are eligible to be refunded under the scheme
Where a person is eligible to submit a refund claim under the scheme, VAT may be reclaimed on the following categories of expenses16:
- Services provided by contractors, including the 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, 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.
Examples of goods which are not considered to be incorporated into the building include:
- Furniture which is not fixed into the building such as sofas, tables, chairs etc.;
- Landscaping, such as trees, grass and plants.
Examples of goods which are considered to be incorporated into the building and would be eligible for a refund of VAT include:
- Central Air conditioning;
- Fire alarms and smoke detectors;
- Flooring (excluding carpets);
- Kitchen sinks, work surfaces and fitted cupboards;
- Sanitary ware;
- Shower units;
- Window frames and glazing;
- Wiring when embedded inside the structure of the building.
How to submit refund claim
All applications for New Residence VAT Refunds must be submitted via the FTA e- Services Portal.
For further details please refer to the VAT Guide on VAT Refund for UAE Nationals Building New Residences.