Value Added Tax (VAT) in UAE has a wide scope and it covers almost every sector of the country’s economy. Although the tax is very small (just 5%) but many businesses are affected by this tax and they are feeling somewhat pressurized. But not every segment, is facing the problem of this newly implemented tax and they are feeling very little burden of this tax as compared to other economic zones. One such sector is the real estate.
Real estate sector provides useful revenue for UAE economy and the government wants to retain this sector as an important revenue provider for economy. For this purpose, the new 5% VAT will not be implemented on most of the deals related with real estate business, according to two government authorities.
According to details, Federal Tax Authority (FTA) and the Dubai Land Department (DLD) have confirmed that the 5% VAT will not affect around 85% components of the real estate sector in Dubai. FTA’s DG, Khalid Ali al Bustani, told that the real estate sector has an important place in the eyes of government and they want to promote all the activities of this sector. In order to achieve this, the sector is given with special privilege in the tax system of UAE.
DLD’s DG, Sultan Butti bin Majren, elaborated the whole notion that they viewed the details of rent, sales and other transactions of the sector which disclosed that most of the properties traded in 2017 comprised of residential, retail and commercial properties along with bare land that are free from VAT. Therefore around 85% components of Dubai’s real estate sector will not fall under 5% VAT.
He was quite hopeful that the situation will remain unchanged in the coming years that will minimize the effects of VAT on the overall real estate business. This will provide lot of relaxation to entrepreneurs related to real estate sector and will surely attract foreign investment in the country.
It provides best opportunity to foreign investors to take advantage of the incentives provide by the UAE government to real estate sector. For further details and practical assistance in this matter, you can contact Riz & Mona Consultancy by using our WhatsApp # 971-56-9971225.