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Federal Tax Authority showcases progress made on Indirect Taxes in the UAE

The Federal Tax Authority in the UAE is recovering VAT on the Building of new residences by nationals- Are any of them tax-exempt?

Value of taxes refunded through the VAT Recovery on the Building of New Residences by UAE Nationals programme grew by 84.4% in Q2, 2019 Number of approved applications rose 66% More than 390 applications – worth approximately AED18 million – were submitted in Q2 2019 by UAE citizens

The Federal Tax Authority (FTA) is invested in facilitating procedures for the Value Added Tax (VAT) Recovery on the Building of New Residences by UAE Nationals programme, asserted His Excellency Khalid Ali Al Bustani, FTA Director General, at a discussion held at the Majlis of H.E. Abdullah Muhair Al Kutbi in Al Mushrif, Abu Dhabi. 

“The VAT Recovery on the Building of New Residences by UAE Nationals programme is in line with the wise leadership’s vision to develop a modern housing system for citizens and ensure their wellbeing,” H.E. Al Bustani explained, revealing that the second quarter of 2019 witnessed significant growth in the number and value of transactions submitted by UAE nationals who’ve built new homes. More than 390 applications – worth approximately AED18 million ($4.9 million)– were submitted in Q2 2019 by UAE citizens who successfully recovered the taxes they incurred on building their homes, up from 235 application (worth AED9.76 million or $2.66 m) submitted in Q1 2019. This amounts to a 66% growth in the number of applications received and an 84.4% increase in the value of these transactions. 

Read more: VAT gives 5% boost to UAE government revenue as compliance reaches 97%

The first supply of a residential building during the first three years of its completion is subject to zero-rated tax, while all subsequent supplies are exempt from tax even if made during the first three years of completion. 

The supply of commercial property – be it sale or rent – is subject to the basic VAT rate of 5%.

Registration for VAT is mandatory for any natural or legal person who carries out business in case their taxable supplies exceed AED375,000 during the previous 12 months or are expected to exceed that amount in the next 30 days.

The Authority began implementing a new tax awareness campaign that will continue for the remainder of 2019 and 2020, reaching out to new business sectors and taxpayers in general. Furthermore, the campaign seeks to increase knowledge of the tax system among members of the community, whereby several seminars and workshops were organised, bringing together experts and stakeholders concerned with the tax system from all seven emirates. This in addition to the campaigns carried out through media outlets and social networking sites.

Read more: Self-Service Kiosks to Be Introduced Allowing Tourists to Recover VAT without Dealing with Employees

In accordance with the UAE Cabinet Decision No. (52) of 2017 on the Executive Regulations of the Federal Decree Law No. (8) of 2017 on Value Added Tax, the Tax Returns and payment of due tax to the Authority must be submitted no later than the 28th day after the end of the relevant Tax Period, H.E. noted, urging all businesses registered for VAT to submit the Tax Returns and pay the taxes due well before the deadline, to allow sufficient time for these to be processed and received by the Authority on time. 

H.E. Al Bustani cautioned against waiting until the last day to make the payments, as it may cause a delay and lead to the Authority receiving the funds after the deadline. The FTA Director General urged registered businesses to submit their periodic returns on the dates set for them even if the value of their supplies during the Tax Period is equal to zero.

The Federal Tax Authority was established by Federal Decree-Law No. (13) of 2016 to help diversify the national economy and increase non-oil revenues in the UAE through the management and collection of federal taxes based on international best practices and standards. www.tax.gov.ae.