New Residence VAT Refund Scheme for UAE Nationals

The New Residence VAT Refund Scheme is a Special Refund Scheme available in UAE VAT Law. This scheme is applicable only to UAE Nationals who construct a Residential Building for his/her or for his/her family. This is applicable when the person owns or acquires land in UAE on which he builds or commissions the construction of his own residence. Under this scheme, such a person will be entitled to claim a refund of the tax paid on the expenses of constructing the residence.

Conditions to be eligible:

1. Refund request should be submitted by a Natural Person
2. He/she must be UAE National
3. Tax Refund is in respect to the Expenditure incurred for constructing Residential Building
4. Residential Building should be used by his/her or his/her family members for Residence

Time Limit:

VAT Refund claim under this scheme is required to be lodged within 6 months from the date of completion of the newly built residence. A newly built residence is considered as completed on:

• the date the residence becomes occupied (or)
• the date when it is certified as completed by a competent authority in UAE; whichever is earlier

Eligible Expense:

• Services provided by contractors, including 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. This does not include furniture or electrical appliances

Change of Use:

When a person who has claimed refund of VAT under this scheme, later uses the property for commercial use, he/she will be required to repay the tax that was refunded earlier. While applying for refund one has to declare type of fund being used for the construction either personal or Housing Program Fund or both. Funder certificate needs to be provided if the construction is backed by Housing Program Fund. Besides this bank account confirmation letter/certificate should be submitted for the confirmation and transfer of fund into the account. The new residence VAT refund scheme is an assistive scheme for UAE nationals who newly construct their residence in UAE. They can reduce the expenditure incurred on account of VAT paid on the expenses of constructing the new residence. It is also a measure by the UAE Government to assist UAE nationals to construct residences. UAE nationals can note the conditions of this scheme and use it for their benefit. This blog post is written by CA Rashid Ali, Tax Advisor at Flyingcolour Tax Consultants. If you are an UAE National and you have any question related to this newly introduced VAT Refund Scheme then feel free to call us at +971 4 4542366 today for a quality consultation or please send inquiry to info[at]flyingcolour[dot]com. Please Note: This article was published on 10th September,2020. The information provided in the article is based on the policies and rules applicable at the time of writing it. Talk to one of our consultants for any recent update or change.