Can UAE nationals get a VAT refund on building a new home?

Article 66 – New residence 1. Where a Person owns or acquires land in the State on which he builds, or commissions the construction of, his own residence, he shall be entitled to make a claim to the Authority to repay the Tax on the expenses of constructing the residence. 2. For the purposes of Clause 1 of this Article: a. The claim may only be made by a natural Person who is a national of the State. b. The claim must relate to a newly constructed building to be used solely as residence of the Person or the Person’s family. c. 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, guest house, hospital or for any other purpose not consistent with it being used as a residence. 3. The refund claim under this Article must be lodged within 12 months from the date of completion of the newly built residence. For the purposes of this Clause, a newly 49 Article amended as per Cabinet Decision No. 100 of 2024. Cabinet Decision No. 52 of 2017 and its amendments – As published by the Ministry of Finance 58 built 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 State, or as may otherwise be stipulated by the Authority.50 4. A refund claim must be submitted to the Authority in such manner and containing such details as the Authority may stipulate. 5. Where the Authority has repaid Tax in accordance with this Article, and following the receipt of such repayment the Person breached the condition in paragraph (c) of Clause 2 of this Article, the Authority may require the Person to repay the amount of Tax that was recovered by him. 6. The categories of expenses on which the Person may claim a repayment of Tax under this Article are: a. Services provided by contractors, including services of builders, architects, engineers, and other similar services necessary for the successful construction of residence. b. Building materials, being goods of a type normally incorporated by builders in a residential building or its site, but not including furniture or electrical appliances.

13. VAT Refund for New Residences 13.1. When is the VAT refund available? Where a UAE citizen owns or acquires land in the UAE on which the person builds or commissions the construction of his own residence, he shall be entitled to make a claim to the FTA to repay the VAT on the expenses of constructing the residence. The claim may only be made by a natural person who is a UAE national. 13.2. Conditions for the special VAT refund In order to claim a refund of the VAT incurred on the construction of a residence, the following conditions must be met15: • • • The claim may only be made by a natural person who is a UAE national; The claim must relate to a newly constructed building to be used solely as the residence of the person or the person’s family; and 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, guest house, hospital or for any other purpose not consistent with it being used as a residence. The refund claim must be lodged with the FTA within 12 months from the date of completion of the newly built residence. 13.3. Costs which are eligible to be refunded under the scheme Where a person is eligible to submit a refund claim under the scheme, VAT may be reclaimed on the following categories of expenses16: • • 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 in a residential building or its site, but not including furniture or electrical appliances. Goods are normally considered to be incorporated into a building when they are fixed in such a way that the fixing or removal of those goods would either require the use of tools, or result in the need for remedial work to the fabric of the building, or substantial damage to the goods themselves. Examples of goods which are not considered to be incorporated into the building include: • Appliances; 15 Article 66(2), VAT Executive Regulations 16 Article 66(6), VAT Executive Regulations 34 VAT Guide | Real Estate | VATGRE1

Buildings and units registered for commercial purposes, including hotel apartments, serviced apartments and guest houses,4 do not qualify as “residences” for purposes of the New Residences Refund Scheme. It may happen that part of the building is used as a study or for other activities. In such instance, the building will still be regarded as a residential building if only a small proportion of it is used as an office or workspace by the occupants.5 3.3. Eligible Persons The Refund Request may only be made by a natural person who is a UAE national6 and holds Family Data. Kindly note that, with effect from 2024, the Family Book requirement was replaced with “Family Data” which is a digital alternative to the Family Book. All information recorded in the Family Book should be included and displayed in the Family Data, including the UAE National’s family members and place of birth. For more information, please see the Federal Authority for Identity, Citizenship, Customs & Port Security’s website at https://icp.gov.ae. 3.4 Eligible expenses For a refund claim to be considered by the FTA, it must meet the following conditions: 3.4.1 Usage of the building Expenses must relate to a newly constructed building which is to be used solely as a residence of the Applicant and / or his or her family.7 3.4.2 Nature of expenses VAT may only be recovered in respect of the following categories of expenses:8 4 5 6 7 8 Article 66(2(c) of the VAT Executive Regulation. Article 37(3) of the VAT Executive Regulation. Article 66(2)(a) of the VAT Executive Regulation. Article 66(2)(b) of the VAT Executive Regulation. Article 66(6) of the VAT Executive Regulation. VAT Guide | Refund for UAE Nationals Building New Residences | VATGRH1 8

Article 37 – Residential buildings 23 1. The phrase “residential building” means a building intended and designed for human occupation, including: a. Any building or part of a building that the person occupies, or that it can be foreseen that a person will occupy, as their principal place of residence. b. Residential accommodation for students or school pupils. c. Residential accommodation for armed forces and police. d. Orphanages, nursing homes, and rest homes. 2. A “Residential building” does not include any of the following: a. Any place that is not a building fixed to the ground and can be moved without being damaged. 23 Article amended as per Cabinet Decision No. 100 of 2024. Cabinet Decision No. 52 of 2017 and its amendments – As published by the Ministry of Finance 29 b. Any building that is used as a hotel, motel, bed and breakfast establishment, or hospital or the like. c. A hotel apartment or serviced apartment or the like. d. Any building constructed or converted without lawful authority. 3. A building shall be considered as a residential building if a small proportion of it is used as an office or workspace by the occupants, if it includes garages and gardens used in conjunction with it, or it includes any other features that may be considered to comprise part of the residential building.