Get ready because more tax benefits are here!

Over the last two years, the UAE has been getting used to the newer VAT and excise taxes.

Many may have felt a pinch in your pocket.  While at work, others have done everything possible to help their business adjust and continue to prosper.  

Despite this, many UAE nationals built new homes for themselves and their families.  After all, why not build the house of your dreams if you can afford it?

Well, there’s good news!  UAE nationals who have recently constructed a home are now eligible for a tax break!  

That’s right, you can now share your newfound knowledge with your eligible clients – and help them get 5% VAT tax refund off their new home.  A fact that will surely leave them loving you and using your services, year after year.

You heard the outstanding news.  So what’s the bad news? Helping your clients get that refund will take some work on your end.    

Grasp the Essentials of VAT Refunds

We know you might be thinking there’s a catch.  And you’re just waiting to hear about the specifics.  

Because everything hides in the details, right?  

Well, let’s break it down.  Here is how your clients would be eligible for this 5% tax refund:

Your client is paying the 5% up front (the contractor is adding VAT to the price you pay).  You have to be a UAE national to request this refund. Once confirmed, all clients have to do is fill out this form and email it to this FTA email address:  homebuilders@tax.gov.ae.

What Else Do I Need To Know?  

In the refund form your client has to be able to prove they own the property.  

How?

  1. The client must show they owned the plot of land the house was built on (in the UAE).
  2. Certified Completion certificate.
  3. The date the building was occupied.

There’s more your client has to do to completely certify that they are a UAE national.  The FTA requires them to send a copy of their passport, Emirates ID, and Family Book.

That’s not all.  There is a time limit to claim the 5% refund.  If their application is not submitted within 6 months from when they started occupying the residence OR the date when construction was certified complete by a UAE government authority, they lose out.  

How do they decide what date to choose when submitting?  Choose whichever date came first.

What Happens after Submission?

After submitting, the client should receive a reference number within 5 business days from the FTA.  This lets them know the submission was successful.

But don’t celebrate yet.  The process is just getting started…

Then they have to apply to an FTA-authorized verification body to check out all the invoices and costs from their new home.  These verification bodies are third-parties which determine if they’re eligible for the 5% refund.

Here are some tips you can share with clients to increase their chances:

  • FTA stamped refund form and reference number
  • The construction plan
  • Valid tax invoices issued in the applicant’s name
  • And simplified tax invoices will not be accepted.   

The verification body can take up to 15 days to respond to the request.  When approved, their application goes over to the FTA which can take up to 20 days to respond.

What About New Construction For Businesses and Rentals?

Unfortunately, the 5% VAT rebate only applies to newly constructed homes designed for personal use.  Businesses such as hotels, rental properties, hospitals are not applicable.

Is There Anything New Home-Related Not Covered By The Refund?

Your client’s newly constructed home contains many elements – building materials for the actual structure, furniture, electrical, appliances, and more.  

Unlucky for their wallet, not all of it is refundable.  So what can they refund?

Let’s do a quick break down:

Refundable items:

  • Price paid on the property lot
  • Building materials
  • Doors
  • Fire alarm systems
  • Floors
  • Kitchens
  • Health units
  • Bathrooms
  • Windows
  • Electricity cables

Non-Refundable items:

  • Furniture
  • Appliances
  • Gardens and Landscaping

Prosperity Ahead!

Clearly, it’s not easy to get this 5% VAT refund but your client might believe it’s worth it.  There’s a lot of paperwork but your accounting skills will be a huge help in simplifying the process.  

And if your client is not eligible for the refund?  

No worries.  

Think about leveraging your accounting skills to share this knowledge with clients (and potential ones) looking to build a new home in the future.  

You could assist them in organizing and submitting their paperwork to get the highest possible refund.  Then you could potentially earn a commission off the refund.

And if you don’t have any clients that meet this criteria?  Save this information for later! You now have what you need to navigate this refund process.    Did we cover everything related to VAT on new home construction?  Do you still have questions? If so, feel free to shoot us an email at Dhariba.com for all your tax questions.  Or just leave us a comment below.