INTRODUCTION
Article 75 of Federal Decree Law 8 of 2017 as amended (the VAT Law) provides that where a national of the UAE (UAE National) owns or acquires land in the UAE on which he / she builds or commissions the construction of his / her own residence, he / she is entitled to request a special refund from the FTA (the Refund) for the VAT incurred on certain expenses (Expenses) related to the construction of a new residence, subject to certain conditions (VAT Refund Regime) stated in Article 66 of the VAT Executive Regulation (Cabinet Decision 52 of 2017 as amended) (the Regs). The Federal Tax Authority (FTA) has also recently issued a new VAT Guide (VATGRH1 – April 2026) in respect of the Refund scheme (the Guide).
In this newsflash, we take a brief look at the VAT Refund Regime and the key considerations for individuals looking to claim a VAT refund on their new builds, in particular:
- eligibility requirements;
- the Expenses that will qualify;
- the Time period in which to claim; and
- the FTA’s Application and Evaluation process.
ELIGIBILITY REQUIREMENTS?
In terms of Article 66(2) and 66(4) of the Regs, any Refund claim must meet the following conditions:
- The claim may only be made by a natural Person who is a national of the UAE.
- The Refund Request may only be made by a natural person who is a UAE National and holds Family Data. We understand that with effect from 2024, the Family Book requirement was replaced with “Family Data”, a digital alternative to the old Family Book.
- The claim must relate to a newly constructed building to be used solely as a residence of the Person or the Person’s family.
- A “residence” refers to any newly constructed building (including townhouses and villas) used predominantly as a private home, including fixtures and fittings, which comprise at least of cooking and washroom/bathroom facilities in addition to sleeping quarters. Subsequent attachments or detached structures on the same plot are, generally, not considered a “residence” unless they have washroom/bathroom facilities, sleeping quarters, and access to cooking facilities.
- The claim may not be made in connection with a building that will not be used solely as a residence by the Person or the Person’s family, for example if it is to be used as a hotel, serviced apartment, guest house, hospital or for any other purpose other than a residence.
- Should a person breach this requirement after receipt of a Refund, the FTA may require such person to repay the Refund.
WHAT EXPENSES QUALIFY?
The following categories of expenses will qualify under the Refund scheme:
- Services provided by contractors, including the 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 into a residential building or its site, excluding furniture or electrical appliances.
- Goods and materials are normally considered to be incorporated into a building when they are attached in such a way that the removal of those Goods would require the use of tools or result in the need for remedial work to the structure of the building, or cause damage to the Goods / materials themselves.
- Examples of excluded Goods which are not considered to be incorporated into the residence include:
- Appliances that are removable and not built into the residence.
- Furniture such as sofas, tables, chairs and loose carpets.
- Landscaping, such as trees, grass and plants.
- Swimming pool and spa.
- Examples of included Goods considered incorporated into/attached to the building, and required for the building to function as a residence include:
- Central air conditioning and split units.
- Doors.
- Fire alarms and smoke detectors.
- Flooring (excluding loose carpets).
- Kitchen sinks, work surfaces and fitted cupboards.
- Sanitary and shower units.
- Window frames, awnings and glazing.
- Wiring when embedded inside the structure of the building.
- VAT incurred on transport costs and clearing agent fees on importation of building material may be recovered to the extent these costs are incurred directly in connection with building materials to be used for constructing a new residence for a UAE National or his / her family.
- For a detailed list of eligible expenses, please refer to Appendix 1 of the Guide.
HOW LONG DO YOU HAVE TO CLAIM?
In terms of Article 66(3) of the Regs, the Refund claim must be lodged within 12 months from the date of completion of the new residence. A new residence is considered completed at the earlier of:
- the date the residence becomes occupied; or
- the date when it is certified as completed by a competent authority in the UAE (Building Completion Certificate),
- or as may otherwise be stipulated by the FTA.
The date the residence becomes occupied should be determined based on the facts and the applicant will be required to maintain documentary proof to substantiate the date on which he / she occupied the residence.
Currently, the Guide has not explicitly stated what is a ‘competent authority’ for the purposes of the VAT Refund Regime; however we expect more details to be made available by the FTA in due course.
Where an applicant is unable to apply for a refund before the lapse of the 12-month period contemplated above, an exception to the general 12-month rule may be granted in certain limited circumstances such as (i) absence from the UAE due to military service or illness, (ii) legal disputes regarding the residence, or (iii) pending technical issues which require further work to be done before the residence will be ready for occupancy. However, it should be noted that the FTA has discretion to accept or reject a request for an alternative date of completion.
REFUND APPLICATION PROCESS
A Refund application must be submitted either using the Maskan application or through EmaraTax. The Guide confirms that both the Maskan application and EmaraTax can be used as they are synchronised. A UAE National may only submit one Refund Request per residence, except in the case of retention payments where a further application in respect of the same residence may be submitted under certain circumstances.
For further guidance on the application process, please refer to the following manuals issued by the FTA:
- FTA User Manual - Initiate Indirect Refund Claim for UAE Nationals Building New Residences; and
- FTA User Manual - Initiate and processing retention payment claims for UAE Nationals Building New Residences Refund.
Supporting documents to be submitted with Refund Application
In terms of the Guide, an Applicant will be required to provide the following documents as part of submitting the Refund application to the FTA:
- Copy of the Applicant’s Emirates ID.
- Copy of the Applicant’s Family Data (Family Sequence Number).
- Copy of the property completion certificate and building permit.
- Copy of the property site plan.
- Documentary evidence proving that the Applicant owns the plot of land in the UAE on which the residence was constructed.
- Copy of the letter/certificate issued and stamped by the Applicant’s bank which includes details such as the account holder’s name, bank’s name and IBAN.
- Power of attorney where the application is submitted on behalf of the owner, and / or court permission where the submission is on behalf of minors.
- In addition to the above, the FTA may request further documentation to evidence the date the building is occupied (if needed).
FTA EVALUATION PROCESS
Following submission, the FTA will acknowledge receipt of the Refund request and review the application and supporting documents to determine whether the Applicant is eligible under the Refund Scheme. A reference number will be provided to the Applicant, and additional information may be requested.
If the initial assessment is successful, the application will be transferred from the FTA to the Verification Body for further review. The Verification Body does not charge a fee for this service.
The Verification Body may require the Applicant to submit additional documentation supporting the claim using EmaraTax or the Maskan application, for example:
- Architectural layout drawings.
- Building permit.
- Copies of the construction contract (including addendums).
- Copies of the consultancy agreement (including addendums).
- Copies of variation orders.
- Copies of invoices that include returned items.
- Copies of credit notes,
- Tax Invoices and proof of payments (for example, receipts) provided by the contractor and the consultant to the Applicant.
NB - Tax Invoices should include the name of the owner (i.e. the Applicant), valid TRNs and the correct VAT amounts. Simplified Tax Invoices will not be accepted for the purposes of claiming a VAT refund. Tax Invoices issued in the name of a related party / consultant / contractor / agent, must state that they are for the use of the Applicant and reflect the details of the building (including the plot number) for which the costs were incurred. Furthermore, the related party / consultant / contractor / agent has to confirm that it is not recovering any Input Tax related to the same Tax Invoice)
Once the Refund Request is reviewed by the Verification Body, the Verification Body will inform the FTA of the outcome of the verification. Following this, the FTA will notify the Applicant whether the Refund Request is approved, amended or rejected.
Reviewing the documents and refunding VAT might take up to 20 Business Days from the date all the required documents were submitted.
OUR TAX SERVICES
Our Tax Team can assist you with any queries you might have in relation to the new residences VAT Refund Regime or any other UAE tax queries you might have.
Hadef & Partners provide clients with specialist tax advice, planning and implementation support to achieve optimal tax outcomes for their business and personal interests in the UAE. Should you require support, please contact Theunis Claassen, our Head of Tax, or Nimrod Thien to arrange an initial discussion.
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This article is intended for general informational purposes only and does not constitute legal advice. Readers should seek independent legal counsel in relation to their specific circumstances.