19/11/2017 07:53 AST

Residential units in the UAE will remain generally exempt from value added tax (VAT), except for the first supply of a new residential building within the first three years of it being constructed, which will be 0 per cent rated, a report said.

Meanwhile, the supply of commercial real estate, selling or leasing, will be subject to VAT at 5 per cent, reported Emirates news agency Wam, citing a statement by the Federal Tax Authority (FTA).

The FTA defines the supply of real estate as activities that include, among other things, the sale, lease or giving of the right to any real estate.

A residential building is a building or part thereof that is intended and designed for occupation by individuals, and mainly includes buildings that can be occupied by any person as main place of residence.

This does not include any place that is not a building fixed to the ground and that can be moved without being damaged; any building that is used as a hotel, motel, bed and breakfast establishment, hospital or the like; a serviced apartment for which services in addition to the supply of accommodation are provided; and any building constructed or converted without lawful authority.

Meanwhile, a commercial building is any building or part thereof that is not a residential building. Examples include offices, warehouses, hotels, shops, etc.

The first supply of a new residential building within the first three years of it being constructed shall be zero-rated. All subsequent supplies shall be exempt, even if within the first three years.

All supplies of commercial property are subject to VAT at 5 per cent, including all buildings or parts thereof that are not residential buildings.

The owners of residential buildings do not register for VAT if they do not have any other business activities. However, owners who do have other business activities must check to see whether or not they are required to register.

The owner of any building that is not residential, will have to register if the value of the supplies over the preceding 12 months exceed Dh375,000 ($102,000) in value, or if it is expected that they will exceed Dh375,000 over the coming 30 days.

An owner of a residential building will not be able to recover VAT on expenses related to the supply of the exempt residential building. Meanwhile, an owner of a commercial building will generally be able to recover VAT on expenses related to the supply of the building.

The rent or sale of a residential part of the building shall be treated as zero-rated or exempt, depending on whether this is a first supply or a subsequent supply. The rent or sale of a commercial part of the building, however, shall be treated as subject to VAT at 5 per cent.

The tax incurred by the owner on the building needs to be apportioned where there is an exempt supply, and the portion related to the taxable supply (at 0 per cent and 5 per cent) may be recovered.

Trade Arabia

Ticker Price Volume
QNBK 135.21 176,223
SABIC 110.24 4,338,435
ALMARAI 53.98 562,958
BURUJ 34.51 80,357
PETRORABIGH 24.75 1,456,662
STC 78.66 497,315
WALAA 33.30 525,591
UAE economy to benefit from trade growth in 2018


The UAE’s trade will benefit this year from rising oil prices, improved macroeconomic outlook for country’s key trading partners, and increased government spending, according to an HSBC research.

Gulf News

Finance professionals imperative for economic diversification


ACCA (Association for Chartered Certified Accountants) recognised over 40 members in Oman who achieved a significant professional milestone by becoming ACCA members. They were honoured at an event he

Oman Daily Observer

UAE Central Bank decides to raise interest rates


The Central Bank of the UAE (CBUAE) has announced that, effective from today (Thursday), it will raise interest rates applied to the issuance of its Certificates of Deposits in line with the increase

The Gulf Today

Gulf economies set to improve this year: World Bank


The Gulf Cooperation Council (GCC) region witnessed another year of disappointing economic performance in 2017 but growth should improve in 2018 and 2019, according to the World Bank’s biannual Gulf

Trade Arabia

$1 trillion energy investment likely in Mena: Apicorp


Almost $1 trillion for energy investment is likely in the Middle East and North Africa (Mena) region over next five years, a research report said.

The annual Mena Energy Investment outlo

Trade Arabia