UAE Federal Tax authority (FTA) has recently (in August 2020) updated the guide on Refund for UAE Nationals Building New Residences (VAT Guide – VATGRH1).  

There have been more details included in the updated guide such as on eligible residences and applicants, criteria for recoverable expenses; a detailed table has also been included to list out eligible and non-eligible expense items.

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Below highlights of the FTA Guide:

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VAT refund scheme:

UAE nationals are entitled to a special refund scheme of VAT incurred on the construction of a new residence for own use.

The applicant has to submit a Refund request on the FTA e-services portal along with required supporting documents related to information of applicant and the property.

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Eligibility:

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• Only a natural person who is a UAE national and holds a Family book is eligible to file this refund with FTA.

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• Building should be a newly constructed building only.

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• Expenses incurred for any addition or extension of an existing building are not recoverable

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• The Building should be constructed for purpose of applicant’s residence or for residence of any of his family member.

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• A building to be used as a commercial property such as hotel, guesthouse will not be able to claim refund under this scheme.

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Examples of expense items:

Eligible for refund	Not eligible for refund
Services of Builders, architects, engineers or any such supervisory services.	Furniture, which is, not affix to the property (such as sofa, table, chairs etc.)
Building materials for construction of the property	Electronic Appliances and Kitchen appliances
Plumbing materials, paints	Swimming pools and children’s play area
Fencing, Fire alarm systems, Air conditioning system	Landscaping, garden furniture
Power points, wiring, sanitary units	Free-standing and integrated appliances such as fridges, freezers, dishwashers, microwaves, washing machines, dryers, coffee machines;

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Timeline for application:

The applicant should submit the VAT Refund request within 6 months of occurrence of any of the below mentioned conditions, whichever happens first.

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• When the residence becomes occupied; or

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• When the property is certified as completed by a competent authority in UAE.

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Steps in application process:

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• Applicant has to submit the “New residence VAT refund request” to FTA on its E-service portal by creating a new taxable person account/special refund.

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• Information regarding the applicant and the property has to be submitted along with the refund request.

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• After the refund request has been submitted, FTA will review and will send an email asking any further information required.

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• Once the FTA has reviewed and approved the eligibility of your refund application, it will be forwarded to verification body (third party) for further checks.

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• During this verification additional documents may be requested by the verification body to check the application such as contracts, invoices, proof of payments etc.

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• Verification body will review and submit the report to FTA about the application within 10days from receipt of documents.

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• FTA will take further 10 days to make a decision after receiving report from Verification body

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• Following this, if approved by FTA the refund will be transferred to the applicant within 5 business days.

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Documents required during initial refund request submission to FTA:

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• Applicant’s Emirates ID and family book

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• Property completion certificate and Building permit.

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• Property site plan.

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• Ownership documents.

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• IBAN Validation letter from Bank.

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Article prepared by: Bhawna Chopra – Tax Partner, Premier Brains with inputs from Aliasgar Garbadawala – Assistant Manager, Premier Brains

This document is only for information purposes and should not be construed as advice. It does not necessarily cover each aspect of the topic with which it deals. You should not act upon the contents of this document without receiving formal advice on your particular circumstances.

If you would like to discuss any VAT matters, please drop us an email at info@premier-brains.com or call us at + 97143542959. 

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