VAT Refunds for UAE Nationals Building New Residences in the UAE

VAT Refund
December 10, 2021Dated:  | |

The cost of getting a building constructed is an expensive affair. Add to that the Value Added Tax (VAT) that is to be paid for services (engineers, architects, builders, etc.) or for materials incorporated in the building, it is pretty hard for the common person. The good news is that a new law allows UAE nationals to request refunds for VAT that had been incurred during the building of new residences. This is not applicable for buildings for commercial use. One can only apply for a refund if the newly constructed building is for personal use. It should be for use by the applicant or their family.

Where to submit?

The Refund Form along with other necessary documents is to be submitted in the e-services portal of the Federal Tax Authority (FTA).

When to submit?

The request for VAT refund for building new residences for own use should be submitted within six months of the date the building was certified completed by a competent authority in UAE or the date the residence was occupied, whichever is earlier.

Documents required to be submitted along with Refund Form:

  • Copy of Passport, Emirates ID and family book of applicant
  • Proof to identify the applicant as the owner of the plot of land in which the building was constructed
  • Document stamped by bank to identify the bank account details
  • Copy of declaration from the funding body or institution, if the construction was funded by any such body or institution
  • Copy of the construction plan 
  • Copy of the completion certificate and building permit of the property
  • Document to evidence the date the building is occupied as applicable

Process:

  1. Submission of Refund Form along with  required documents in e-service portal of FAT
  2. The applicant would be notified with a Reference number within five working days.
  3. All invoices and costs related to the refund claim would be verified by Verification Body that had been authorized by Federal Tax Authority. These submitted tax invoices should be in the name of the applicant. They do not accept any simplified tax invoice.
  4. The Verification Body would need 15 working days to process the VAT refund request.
  5. A report is then submitted by the Verification Body to the Federal Tax Authority.
  6. The VAT refund application would be processed by the FTA within 20 working days.
  7. If the application is approved, the refund payment would be done in five working days.

Note: In case of retention payments, i.e., when the applicant is yet to pay a certain amount to the builder after a certain period of time, a person can go ahead with the initial application along with an indication of the future retention payment. Once the retention payment is done, the applicant can submit another VAT refund application with the proof of said payment within six months of the retention payment.

The process of VAT refund is fairly new and maybe complicated for the uninitiated. Flyingcolour Business setup services have been helping clients for the past 17 years. For any tax-related queries or assistance please feel free to mail your queries at info@flyingcolour.com or contact us at +971 4 4542366.

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