VAT REFUND FOR BUILDING NEW RESIDENCY BY UAE NATIONALS
Article 66 of the Cabinet Decision No 52 of 2017, a UAE national who owns or acquires land can claim a refund on the expenses incurred while building or commission the construction of his/her own residence. Such a claim is subject to certain conditions. VAT Refund for building residency by UAE nationals user guide was issued by the FTA to help the UAE nationals claiming a refund for building new residency. It was designed to provide answers to the queries related to the refund form and also for making the claimants aware of the icons and symbols which might appear on the form’s completion. The person's claiming VAT refund under this has an option to claim a refund from the refund form instead of setting up an e-services account.
CONDITIONS TO BE FULFILLED FOR CLAIMING THE REFUND
A UAE national claiming VAT refund for building new residency is required to fulfill the following conditions :
- The expenses relate to a newly constructed building used as an applicant’s residence or his/ her family.
- The services provided by the contractors pertains to constructing the residence.
- The building materials are the ones incorporated by the builders in a residential building and excludes furniture or electrical appliances. Goods or materials incorporated into a building are the ones which are fixed in such a manner that its removal or fixing requires the use of tools or results in the need for remedial work or causes substantial damage to the goods/ materials themselves.
PROCESS OF CLAIMING REFUND
STEP 1: SUBMITTING OF APPLICATION
A claimant claiming a refund is required to send the refund form to the FTA within 6 months from the date of completion of the newly built residence along with supporting documents.
DOCUMENTS TO BE SUBMITTED WHEN SUBMITTING THE REFUND FORM
While submitting an application to the FTA, the claimant is required to attach the following documents :
- Documentary proof to support that the claimant:
- Owns a specific plot of land in the UAE
- That the building is certified as completed
- That the date of the building is occupied
2. A bank account validation letter/certificate which is issued and stamped by the bank and includes the details of the account holder’s name, the bank’s name, and the IBAN
3. A copy of :
- Emirates ID
- Family Book
- Consultancy agreement (including addendums)
- Variation Orders
- Invoices that include returned items
- Credit notes
- Construction contract (including addendums)
4. A declaration letter which is provided by:
- The government housing fund
- Consultant/ Contractor
STEP 2: COMMUNICATION OF ELIGIBILITY CHECK RESULTS
An email of the eligibility check results is sent by the FTA in no later than 5 business days when the claimant submits his refund form along with the supporting documents. If the eligibility results are positive, the FTA provides the claimant with an application reference number. Once approved, the applicant/ claimant is required to provide the following additional documents :
- Lump-sum invoices that are provided by the contractor/ consultant to the owner
- Cost schedules for materials and labor
The FTA can also reject the application to validate eligibility
STEP 3: ADDITIONAL VERIFICATION BY THE FTA OR VERIFICATION BODY
If the FTA requests for additional documentation if the applicant is eligible for a refund. The FTA communicates to the applicant if the application requires an additional review by the verification body. Verification bodies are third parties approved by the FTA for performing a detailed review of the expenditure, invoices, and incurred VAT. This verification is undertaken to verify the VAT refund claimed by the applicant.
After being verified and receiving a reference number, the applicant is required to submit the following documents:
Invoices which :
- Are provided by the contractor/consultant to the owner in a lump sum
- The invoices against which the refund claims are made. These invoices should have valid TRNs, VAT amounts and owner’s name
2. Supporting receipts to confirm payment must be submitted along with the invoices. Tax invoices issued in the contractor’s/ consultant’s name should state that they are being used for the owner
3. Copy of
- Construction contract and addendum.
- Consultancy agreement and addendum.
- Site plan (construction plan)
- Schedule of work.
- Timesheet of labor
- Revised Contract(s)
- Sub-contract agreement(s)
4. Soft copy of :
- Approved original and amended drawings from the relevant municipality.
- The Bill of Quantities (BOQ)
- The Materials Table
5. Variation Orders
6. Materials Delivery note
The FTA processes the refund application within 20 business days of the completion of the eligibility check.
STEP 4: NOTIFICATION OF THE APPROVAL
Once processed and approved, the same is notified by the FTA to the claimant. The FTA either transfers the recoverable amount within 5 business days to the applicant’s bank account or rejects the application.