VAT Refund for UAE Nationals Building New Residences

July 21, 2025

The UAE Federal Tax Authority (FTA) offers a VAT refund scheme to UAE nationals constructing new residences. This initiative aims to alleviate the financial burden of VAT on construction costs, promoting homeownership among Emiratis.

Meaning of ‘residence’ for VAT purposes

A ‘residence’ refers to any building—such as a townhouse or villa—mainly used as a private home by an individual. It must include basic living features like a kitchen, bathroom, sleeping areas, along with any fixtures or fittings that come with it.

Additions or separate buildings built later on the same plot are not considered part of the original residence for the New Residences Refund Scheme, unless they independently meet the definition of a residence (i.e., have their own kitchen, bathroom, and sleeping areas).

Examples

If a children play area is added later, the VAT on its construction cannot be reclaimed.
If a separate second house with full living facilities is built later, the VAT can be reclaimed—if all other conditions are met.
If a second floor with full living facilities is added to the existing home, the VAT on this cannot be reclaimed, even if all other conditions are met.

Exclusion for New Residences Refund Scheme

Properties registered for commercial use, like hotel apartments, do not qualify as ‘residences’ under this scheme.

Eligibility Criteria

The applicant must be a natural person who is a UAE national.
The applicant must hold a valid UAE Family Book.
The claim must relate to a newly constructed building.
The building must be intended for use solely as the residence of the applicant or the applicant’s family.
The building must not be used for any commercial or non-residential purposes (e.g. hotel, guest house, hospital, clinic).
Only one refund claim is permitted per new residence, except in cases involving retention payments.
Any additions or separate structures built on the same plot must independently qualify as a residence.

Eligible Expenses

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. VAT on transport and clearing agent fees can be refunded if they are directly linked to building materials used to construct a private home for a UAE national or their family. The materials must be fixed to the building in a way that they can’t be removed easily without tools or causing damage. No refund is allowed for costs related to extra or separate structures unless they qualify as a full residence on their own.

A list of what expenses are covered and not covered is provided below:

Expense items eligible for refund

Services of builders
Services of architects
Services of engineers
Supervisory services
Other similar services necessary for the successful construction of the residence
Building materials that make up the fabric of the property (e.g. bricks, cements, tiles, timber)
Central air conditioning and split units Doors
Fencing permanently erected around the boundary of the dwelling
Fire alarms and smoke detectors
Flooring (excluding carpets)
Built-in kitchen, kitchen sinks, work surfaces and fitted cupboards
Sanitary units
Shower units
Window frames and glazing
Wiring when embedded inside the structure of the building

Expense items NOT eligible for refund

Furniture which is not affixed to the building such as sofas, tables, chairs, bedroom furniture, curtains, blinds, carpets
Electrical and gas appliances, including cookers
Landscaping, such as trees, grass and plants
Free-standing and integrated appliances such as fridges, freezers, dishwashers, microwaves, washing machines, dryers, coffee machines
Audio equipment (including remote controls), built-in speakers, intelligent lighting systems, satellite boxes, Freeview boxes, CCTV, telephones
Electrical components for garage doors and gates (including remote controls)
Garden furniture and ornaments and sheds
Swimming pools
Children play structures

Timeline for submitting the application

The refund application must be submitted to the FTA within 12 months from the date the newly built residence is completed which is the earlier of the date:

The residence is occupied, or
The residence is certified as completed by a competent authority (Building Completion Certificate).

The applicant must provide proof of the date the residence was occupied. In certain situations, like illness, military service, legal disputes, or pending construction work, the 12-month deadline can be extended. These events must be supported by official documents, and the FTA will decide if the reasons are acceptable. It should be noted that refurbishments or changes to previously completed work are not considered in this context.

Procedures, steps & required documents

To apply for the New Residence VAT Refund, applicant must submit their application through the FTA E-Services Portal. If they don’t have an account, they need to register first then proceed for refund application by following below mentioned steps:

Step 1

Where the FTA checks the application and may ask for original or extra documents. Only one refund request can be made per residence, unless it includes a retention payment, which allows for a second claim.

Step 2

If the application meets the basic conditions, it moves to next step, where it’s sent to a Verification authority within five working days. Applicant will be given a reference number and may need to submit more documents. The Verification authority will carefully review the expenses and VAT claims.

Request for Tax Refund for Building a New Residence

Procedures & steps:

Sign-up for an Emara tax account through the FTA’s website
Click on the “User Profile” screen
Select “Special Refunds”
Click on “New Residence VAT Refunds”
Click on “New Refund Request”
Fill in the form and submit the request.

Documents required

Copy of the applicant’s Emirates ID.
Copy of the applicant’s Family Book.
Copy of the property completion/occupancy certificate.
Copy of applicant’s property site plan
Documentary proof to support the ownership of the plot
Copy of the IBAN letter.
Any other documents requested at a later stage.

If the request is preliminarily approved by the FTA, the authority will e-mail the applicant requesting additional documents.

Additional Documents which may be requested by FTA

Copy of the construction contract (including addendums).
Copy of the consultancy contract (including addendums).
All tax invoices and proofs of payment (e.g. payment receipts or payment stamps) provided by the contractor & the consultant to the owner.
Any other documents requested at a later stage.

The Verification authority may request additional documentations, or original of documents, to complete verification procedures. Reviewing the documents and making payment might take up to 20 business days from the date all required documents have been submitted.

Retention payments

If a UAE national needs to make retention payments to contractors after the new residence is completed, this should be mentioned in the initial VAT refund application. Once the payment is made, a separate VAT refund claim can be submitted within 6 months of the payment date, along with proof of payment (e.g. a receipt).

Procedures & steps to request for Tax Refund for Retention Payments:

Login to Emara tax account through FTA website
Click on “New Residence VAT Refunds”
Click on “Request Retention”

Note: A claim may not be made in connection with a building that will not be used solely as a residence, for example as a hotel, guest house, hospital or for other similar purposes. Should the building be used for any purpose other than being the residence of a UAE National after receiving the special refund, the FTA will require the applicant to repay any VAT refunded to him as a result of breaching the above condition.

The FTA has launched the “Maskan” application in 2024 to simplify the VAT refund process for UAE nationals building new residences. This digital platform allows users to upload and link invoices, track refund status, and manage claims directly through the app. It reduces paperwork and speeds up the process. The app is available on iOS and Android and requires login via UAE Pass.