VAT Refund Scheme for UAE Nationals
- A special refund scheme is now available in the VAT Law of UAE to support the UAE Nationals.
- All the UAE Nationals who are constructing new living residences here in the UAE come under this VAT Refund Scheme.
- The FTA (Federal Tax Authority) recently released a user manual on the VAT refund for UAE Nationals. This guide is for their new residence which offers a step-by-step guide to be pursued while applying for the VAT refund.
What is this VAT Refund Scheme and how it can benefit UAE Nationals while they build a new residence?
Under the UAE VAT Law, construction of any type of buildings is a taxable supply. Thus, when an individual build even a residential building, he needs to pay government tax for the construction related expenses which includes contractors’ bill, building materials, and so on.That means for constructing a new building they would also need to approach any of the accounting companies in UAE or consult with their existing Tax Consultant in Dubai, or anywhere in the UAE.
But, under this VAT Refund Scheme, the government tax paid for building the new residential home can be refunded with specific conditions.
To begin the procedure, a refund form ought to be submitted to Federal Tax Authority alongside the supporting documentation requested. It should contain the details of the property as well as the applicant. Subsequent to looking into the application if find eligible, Federal Tax Authority will give a reference number to the candidate. Besides, other information can also be asked by FTA or a verifier - who is selected and approved by FTA -so as to review the submitted documents. When the last and final approval comes the eligible sum will be refunded for that applicant.
What arethe Eligibility Criteria for UAE Nationals to Apply for VAT Refund on New Residences?
For applying to the VAT Refund Scheme, the below conditions must be met:
- This scheme is valid only for newly constructed residential buildings.
- The candidate ought to be a natural individual who is also a UAE National.
- The building must be solely utilized as a residence of the individual or the individual's family.
- The refund claim can't be made if the building is constructed to be utilized as a guest house, hotel, hospital, or for some other reason. That means the building should be used consistently as a residence only.
When UAE Nationals can apply for Refund under the VAT Refund Scheme?
The VAT refund application ought to be submitted to the Federal Tax Authority on any of the following occasions happening first:
- When the building is certified and confirmed as finished by a capable authority according to the Building Completion Certificate in UAE.
- The residential building winds up occupied. That means when the individual starts staying in the newly constructed residence.
The candidate ought to submit the application when any of the above-mentioned occasions occur first. In any case, he or she need to submit the VAT refund application by 6 months from the occupancy or certification date.
What are the Expenses eligible for the refund?
The VAT imposed for the following expense categories while constructing a new residential building by a UAE National are qualified under the VAT Refund Scheme:
- Builders Services.
- Supervisory Services.
- Architects Services.
- Engineers Services.
- Other comparative services important for the successful and effective construction of the home.
- Building materials that make up the texture of the property such as tiles, cements, timber, bricks, etc.
- Split Units and Central Air Conditioning.
- Materials for Decoration like paint, etc.
- Smoke Detectors and Fire Alarms.
- Dust Filters and Extractors.
- Flooring except the carpets.
- Permanently erected fencing around the dwelling boundary.
- Hoists and Lifts.
- Other heating Systems.
- Fitted Cupboards, Kitchen Sinks, and Work Surfaces.
- Shower Units.
- Power Points.
- Sanitary Units.
- Materials for Plumbing.
- Wiring when installed inside the building structure.
- Window Glazing and Frames.
Example of Expense Categories which are not eligible for the VAT Refund Scheme:
- Landscaping such as Plants, Grass, and Trees.
- Ornaments, Garden Furniture, and Sheds.
- Gas and Electrical Appliances inclusive of the Cookers.
- Electrical parts for Garage Doors or Gates inclusive of the Remote-Control Systems.
- Integrated and Free-Standing Appliances such as Freezers, Microwaves, Fridges, Dryers, Dishwashers, Coffee Machines, and Washing Machines.
- Furniture which isn't appended to the building structure, for example, couches, chairs, tables, bedroom furniture, carpets, blinds, and curtains.
- Audio hardware such as CCTV, Intelligent Lighting Systems, Telephones, Speakers, Freeview Boxes, and Satellite Boxes inclusive of the Remote-Control Systems.
How to submit the refund form under the VAT Refund Scheme?
In order to claim therefund, you mustcomplete the form accessible on the Federal Tax Authoritywebsite and submit it online, alongside the supporting documents copies. It is critical that copies of all required documentation, for example legitimate tax invoices supporting the actual payment of the VAT are held all together for the case to be approved by the FTA. You will get an instant notification via email upon successful submission of the VAT refund form.
Subsequent to completing the refund form, make sure you send the signed version (soft-copy) of the form in PDF format to this email address "[email protected]" alongside the supporting documentations.
User Guide Ref: