Everything You Should Know About VAT on Real Estate in UAE

The value-added tax applies to a variety of businesses and services in the United Arab Emirates. The real estate industry is one of them; however, VAT applies at different rates according to the type and category of the service.

The owner or person leasing the real estate has to pay tax to the authorities. It includes registering for VAT, calculating the amount paying it on time, registering for VAT repayment, or deregistering for VAT.

If the taxpayer makes mistakes in any of these and misses the deadline, he/she may have to face additional fines and penalties. Therefore, you should not take a risk for VAT payment for your real estate service. You can hire the best VAT consultancy in Dubai and let professionals deal with all the legal and complicated matters and help you fulfill your responsibility on time, without worrying about penalties and loss. Get in touch with experts now to get rid of your VAT worries.

VAT on Real Estate

Real estate is one of the most prominent industries of the United Arab Emirates, which is soaring high. Value-added tax is applicable to the industry. However, it is quite complicated.

Real Estate Services That Fall Under VAT in UAE

Residential and commercial buildings that fall under these categories have to pay VAT in the UAE.

  • Lease
  • Grant
  • Supply
  • Assignment
  • Surrender

Types of Residential Buildings

Here are the major types of residential buildings.

  • Apartments
  • Villas
  • Student accommodations
  • Laborer accommodation
  • Orphanages
  • Nursing homes
  • Rest houses
  • Accommodations of armed forces

Types of Commercial Buildings

Here are the common types of buildings that fall under the category of a commercial building.

  • Shops
  • Offices
  • Warehouses
  • Educational buildings
  • Clinics
  • Hospitals
  • Serviced apartments
  • Factories

What is Mixed-Use Building?

A building with the below-mentioned sections is called a mixed-use building.

  • A residential section
  • A commercial section

What is Bare Land?

Land with the following features is called bare land;

  • Natural objects like river or sea
  • Plants or trees

What is Not a Bare Land?

Land having below mentioned features is considered not bare land;

  • Fully completed buildings
  • Partially constructed buildings
  • Bridges or roads
  • Other engineering works

Zero Rate Real Estate Services

Following real estate services are zero-rated under VAT in UAE:

  • First supply residential buildings
  • First supply charitable buildings

VAT Exempted Real Estate Services

Following real estate services are exempted from VAT in UAE:

  • Supply of bare land
  • Supply of existing residential property

Real Estate Services with Standard VAT Rate

Following real estate services have to pay VAT at the standard rate in UAE:

  • Commercial property
  • Covered land
  • Charitable buildings other than the first supply

Final Words!

VAT application on real estate is one of its most complicated categories. Do not hesitate to consult the experts to pay the due amount and avoid fines and penalties.

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