sales@farahatco.com       +9714250025197142500251+      WhatsApp

How UAE Nationals Can Claim Tax Refunds When Building New Residences

Every year, a great number of UAE nationals achieve their dream of building a house where they can enjoy living together with their families. The construction of a home is a very expensive project and the prices of the expenses are always going up with the inflation. With the aim of supporting home construction among the Emiratis and stimulating house building in the country, the UAE government adopted a tax refund policy for national citizens who build new residential properties in the nation. This article discusses comprehensively the main components of this Tax Refund for UAE Nationals Building New Residences.

UAE nationals tax refund program for new residences

Eligibility criteria for UAE nationals tax refund program for new residences is:

  • Only natural persons who are UAE nationals and hold a valid family book are eligible to claim tax refunds under this scheme. 
  • The applicant must own or hold title to the land on which the new residential building is constructed. 
  • The constructed building must be used solely as the residence of the applicant and his/her family members. 
  • Any property intended for commercial use like hotels or serviced apartments do not qualify for tax refunds.
  • VAT refund program for Emiratis building homes includes expenses that are related to the building materials and the contractor services that are required to successfully complete the construction of the residential building. 

Table 1: Eligible and Non-Eligible Expenses for VAT Refund program for Emiratis building homes

Eligible Expense ItemsNon-Eligible Expense Items
Services of buildersFurniture which is not affixed to the building such as sofas, tables, chairs, bedroom furniture, curtains, blinds, carpets
Services of architectsElectrical and gas appliances, including cookers
Services of engineersLandscaping, such as trees, grass and plants
Supervisory servicesFree-standing and integrated appliances such as fridges, freezers, dishwashers, microwaves, washing machines, dryers, coffee machines;
Other similar services necessary for the successful construction of the residenceAudio equipment (including remote controls), built-in speakers, intelligent lighting systems, satellite boxes, Freeview boxes, CCTV, telephones
Building materials that make up the fabric of the property (e.g. bricks, cements, tiles, timber)Electrical components for garage doors and gates (including remote controls)
Central air conditioning and split unitsGarden furniture and ornaments and sheds
DoorsSwimming pools
Decorating materials (e.g. paint)Children play structures
Dust extractors and filters
Fencing permanently erected around the boundary of the dwelling
Fire alarms and smoke detectors
Flooring (excluding carpets)
Guttering
Other heating systems
Built-in kitchen, kitchen sinks, work surfaces and fitted cupboards
Lifts and hoists
Plumbing materials
Power points
Sanitary units
Shower units
Window frames and glazing
Wiring when embedded inside the structure of the building

 

Timeline for Applying to Refund scheme for Emiratis building residential properties

The application for tax refund of the new house must be submitted to the Federal Tax Authority (FTA) immediately after completion of the new home within 12 months. The completion date is considered as the earlier of the following: 

  • Date the residence is occupied Certificate of completion of the building 
  • The applicant must provide evidence in the form of utility bills or documented proof of occupancy to justify the date of the first occupation. 

In situations where the applicant is unable to meet this timeline because of, for example, illness, military service or ongoing legal disputes, the FTA may review a revised completion date based on the documents that he or she provides.

Application Process for UAE nationals tax refund program for new residences

  • To access the refund application process, you must first register online with the federal tax authority (FTA) by visiting their website, Emaratax account. 
  • After you successfully log in to your Emaratax account, you can start your refund request.
  • Go to the “User Profile” section and select “Special Refunds” from the options. Then choose “New Residence VAT Refunds”.
  • The first phase involves some basic information and preliminary documents. Click “New Refund Request” and fill in the refund form providing details of yourself and the new property. Attach copies of your Emirates ID, family book, property completion certificate and bank account details.
  • Submit this first phase application for review. The FTA will assess your initial eligibility. If approved, you will move to the second phase of document submission.
  • For phase two, the appointed verification agency will contact you to submit more detailed construction-related files. These include building plans, permits, contracts, invoices and payment proofs. Upload all these documents to your account.
  • Once reviewed, they will notify the tax authority of the verification outcome. You will then be informed about the approval or rejection of your full refund claim amount.
  • In some cases where retention amounts are held back, you can apply for a second refund later on. Simply log back into your Emaratax account, navigate to the refund section and click “Request Retention” after submitting tax invoices and payment receipts.

By following these general steps and submitting all necessary records and forms, you stand a good chance of receiving your entitled VAT refund for building a new home in the UAE.

Tax benefits for UAE nationals constructing new houses

This refund scheme for Emiratis building residential properties offers several key advantages to Emirati homeowners:

  • Provides partial or full VAT relief ranging from 5% to 12% on eligible residential construction costs.
  • Encourages house ownership and real estate development activities.
  • Stimulates the overall economy by putting cash back in the hands of citizens for other spending.
  • Simplifies the reimbursement process through online submission of standardized refund requests.
  • Appeals to young nationals planning to build their first independent homes.
  • Supports larger families constructing multiple residential units on a plot of land.

FAQs

Q: What is the tax refund program available for UAE nationals building new residences?

A: The refund program enables the residents to obtain the VAT refund from the FTA for the construction expenses incurred for their new place of living.

Q: How do UAE citizens qualify for tax refunds when constructing new homes?

A: In order to apply, the property must only be used as their home, the applicant must be a UAE national and refunds can be requested for the building materials and contractor services that were used during construction.

Q: What are the benefits and incentives offered to Emiratis under the tax refund scheme for new residences?

A: The scheme provides the tax rebates for UAE citizens constructing residences paid on the eligible construction costs of their new homes to promote the home ownership.

Q: What documents and requirements are needed to apply for a tax refund for building a new home in the UAE?

A: Any applicant who wants to make use of FTA e-Services portal will have to submit the necessary documents like ID, family book, construction permits, proof of land ownership, and tax invoices whenever they are submitting their applications.

Q: Are there any limitations or restrictions on the tax refund program for UAE nationals constructing residences?

A: Yes, the refunds are due within 12 months of completion of the residences used only for living and only one refund per residence is allowed, however in case of retention payments two refunds are allowed.

Q: How does the VAT refund process work for Emiratis building their own homes?

A: Those who apply for FTA online, FTA first assesses the eligibility and then sends it to the verification body for the expense review, and then FTA informs the applicant of the approved, amended, or rejected refund amount.

Conclusion

The program of Tax Refund UAE Nationals New Residences aims to provide valuable financial assistance to UAE nationals for building new homes in the country. By offering Tax rebates for UAE citizens constructing residences on major construction expenses, it eases the cost burden, motivates real estate activity and supports the overall growth objectives of the UAE economy. Strict compliance to eligibility rules is required to benefit from this initiative or hire a tax consultant in dubai to help you . Proper record maintenance and timely applications also help to receive the entitled refunds smoothly. 

Shayan Khan is an experienced Corporate Tax Consultant with over 4 years of expertise. He's skilled in negotiating and investigating taxes with government bodies like the Federal Tax Authority. Shayan excels in reviewing and drafting tax documents and offers strategic advice on complex tax matters. Clients trust his guidance in navigating tax procedures and minimizing liabilities. Read more