VAT Refund for Emiratis for Building a Home in the UAE

Building a home is a major financial decision, especially with rising costs. To support UAE nationals in constructing new homes, the government has introduced a VAT refund program. The program allows Emirati citizens to claim VAT refunds on specific construction costs, easing the financial burden of building their own home.

Recent data shows a remarkable rise in both the number of applications and refunded amounts, highlighting the increasing popularity of this initiative.

The VAT Refund Program: Encouraging Statistics

The VAT refund program has been available to UAE nationals building new homes since many years. By mid-2024, 30,920 applications worth AED 2.54 billion had been approved. This represents a 32.45% increase in applications and a 65.07% rise in refunded amounts compared to mid-2023, when 23,340 applications worth AED 1.54 billion were approved. These statistics reflect the growing use of the program, which provides significant financial relief to citizens.

The FTA attributes this growth to the introduction of improved services, including the launch of the Maskan app, which allows for a fully digital, paperless VAT refund process. The authority has also ramped up its efforts to raise awareness about the program and educate citizens on the application process.

Eligibility Criteria for VAT Refunds

The VAT refund program is available exclusively to UAE nationals who meet specific eligibility criteria:

• The applicant must be a natural person and hold a valid family book.
• The land on which the residence is built must be owned or titled in the applicant’s name.
• The property must be used solely as the applicant’s and their family’s residence. Properties for commercial use, such as hotels, do not qualify.

The VAT refund program covers a wide range of eligible expenses. These include services necessary for the construction, such as builder, architect, and engineer services, as well as building materials like bricks, cement, tiles, and timber. Central air conditioning units, plumbing materials, wiring, and built-in kitchen fixtures are also covered.

However, several ineligible expenses are excluded from the VAT refund. These include furniture, appliances (such as fridges, cookers, and dishwashers), free-standing items, landscaping materials (like plants and grass), and luxury items like swimming pools or audio equipment. Decorative and non-essential elements not integral to the property structure are similarly not covered.

Emirati citizens seeking VAT refunds for new homes can apply online through the Maskan app by submitting the relevant details of themselves, the property, the expenses etc. in the manner prescribed.

Benefits of the VAT Refund Program

The VAT refund program offers several advantages to Emirati homeowners:

• It provides significant financial relief by covering VAT on major construction expenses, which can range from 5% to 12%.
• The program encourages homeownership and stimulates real estate development in the UAE.
• The streamlined online application process makes it easier for citizens to claim refunds.
• The initiative supports larger families who may be building multiple units on a single plot of land.

Conclusion

The VAT refund program for UAE citizens building new homes is a key initiative aimed at supporting Emiratis in achieving their homeownership dreams. Proper documentation and timely applications ensure a smooth refund process for eligible homeowners.

With recent improvements, such as the Maskan app and increased awareness efforts, the program has seen substantial growth in applications and refunded amounts. This is one of many ways in which the UAE Government is helping citizens as well as boosting real estate development and economic growth.