UAE VAT law & Real Estate Sector
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President His Highness Shaikh Khalifa Bin Zayed Al Nahyan has issued the Federal Decree-Law No. 8 of 2017 for Value-Added Tax. I have tried to summarize its implication to Real Estate sector based on my understanding.
![Salient features of UAE VAT law
Promulgated through Federal Decree Law no. (8) of 2017 on Value Added Tax.
Zero rated and exempt supplies (goods and services) explained in law. Rest of
the items are taxable if fulfill the definitions of ‘Taxable Supply’, ‘Deemed
supply’ and ‘Import of Concerned goods’ [Article (2)].
Rate of tax is 5% [Article (3)].
Input tax claimable as Recoverable Tax’ in case of Zero rated / taxable
supplies but not claimable for Exempt supplies.](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
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UAE VAT law & Real Estate Sector
- 1. UAE VAT LAW & Real Estate sector SNAPSHOT EXPLANATION BY ASIM AHMED KHAN
- 2. Salient features of UAE VAT law Promulgated through Federal Decree Law no. (8) of 2017 on Value Added Tax. Zero rated and exempt supplies (goods and services) explained in law. Rest of the items are taxable if fulfill the definitions of ‘Taxable Supply’, ‘Deemed supply’ and ‘Import of Concerned goods’ [Article (2)]. Rate of tax is 5% [Article (3)]. Input tax claimable as Recoverable Tax’ in case of Zero rated / taxable supplies but not claimable for Exempt supplies.
- 3. Categorization of Real Estate supplies Real Estate Residential Lease Sale Non-residential /Commercial / Retail Sale and Lease
- 4. VAT on Non-residential / Commercial / Retail Properties Sale and lease of Commercial / retail properties not included either in zero rated [Article 45] or exempt items [Article 46]. Taxable at the uniform rate of 5% without taking in to account either the project completion period or use / income stream (i.e., lease or sale) Input tax paid on supplies and services used for taxable supplies (sale or leases) would be adjustable against output tax on such taxable supplies.
- 5. VAT on Residential Properties VAT impact on Residential properties is based on income stream (sale and lease) with further classification in case of sale (based on first supply and project completion / period) Input tax can be claimed against Zero rated supplies. Refer next slide for explanation.
- 6. VAT on Residential Properties Residential Sale Zero rated – 1st supply / sale within 3 years of completion of Residential building [Article 45(9)] and 1st supply of buildings converted from non-residential to residential [Article 45(11)] Exempt – 1st supply after 3 years of completion AND every subsequent supply / sale [Article 46(2)] Lease Exempt [Article 46(2)]