19/07/2018 08:31 AST

The 5 per cent VAT on commercial real estate must be paid prior to the completion of an asset sale, not afterwards, the UAE’s Federal Tax Authority (FTA) said on Wednesday.

In a statement clarifying the rules around payment of the levy on property transactions, the FTA urged buyers “to pay the due VAT before proceeding with the transfer of ownership”.

“The tax laws aim to provide a suitable environment for the continued growth and prosperity of the real estate sector – one of the most important economic sectors in the government’s plans to diversify sources of income, and one of the most attractive sectors for investors,” the FTA said.

The UAE, along with Saudi Arabia, introduced a 5 per cent tax on certain goods and services on January 1, to help offset the effects of lower oil prices in the past three years. The UAE and Saudi Arabia are the only GCC states to introduce VAT and excise taxes to date, although all member countries have signed up to implement the levies by next year.

The sale of un-rented commercial properties, as well as off-plan sales and rental of commercial real estate, is subject to the 5 per cent VAT. However, taxes paid on the property’s expenses during a specified rent period can be recovered through the tenant’s tax return, the FTA’s statement said.

Real estate-related services, including brokerage, are also subject to a 5 per cent VAT.

“All other property [including residential] is either not subject to or exempt from the 5 per cent VAT,” FTA director-general Khalid Al Bustani said. Residential buildings whose construction was completed a maximum of three years earlier are subject to zero-rated tax, allowing the owner or investor to reclaim taxes on construction expenses.


The National

Ticker Price Volume
WALAA 20.90 156,306
SAICO 10.80 239,189
QNBK 183.41 314,625
APPC 47.90 363,668
KAYAN 15.50 7,407,695
SARCO 36.60 378,482
SCCO 29.40 226,795
Saudi Arabia’s GDP projected to jump 30% by 2023: IMF

18/10/2018

Saudi Arabia’s gross domestic product (GDP) is expected to jump 29.53 percent to $889.5 billion by the year 2023 while comparing with the year 2017. The GDP is projected to increase 12.11 percent to

Saudi Gazette

Bahrain tops World Bank Index for Human Capital in MENA

18/10/2018

The World Bank has announced its inaugural Human Capital Index, with Bahrain coming in the lead for the MENA region. Focusing on health and education, the Index measures how productive a child born t

Saudi Gazette

Dubai residential property prices drop 7.7% in September

18/10/2018

Real estate rental and sales prices continued to decline across much of the UAE last month as the fight for affordability persists, new data shows. Average residential sales prices in Dubai decrease

The National

S&P reaffirms 'A-' rating for Oman Insurance Company

18/10/2018

Rating agency S&P has reaffirmed the A- Stable rating for Oman Insurance Company (OIC), an important insurance player in the Gulf Cooperation Council (GCC).

It is one of the UAE’s leading

Times of Oman

Sezad woos business community in US

18/10/2018

The Special Economic Zone Authority of Duqm (Sezad) highlighted the investment opportunities available in Duqm to the business community in Washington through several meetings with American companies

Times of Oman