Planning to build your dream home in the UAE? Here’s some good news – you can claim back the VAT you pay on construction costs.

The UAE government introduced a VAT refund scheme for UAE nationals who build their own residences. This initiative reduces the financial burden of building a home and supports more Emiratis in achieving home ownership.

Miqat - UAE Vat Refund On New Residnces

According to a Khaleej Times report, this scheme has helped thousands of Emiratis save significant amounts while constructing their private residences.

In this guide, we’ll break down what the VAT refund scheme is, who qualifies, what expenses are covered, how to apply, and what to watch out for.

What is the VAT Refund Scheme for UAE Nationals?

When you build a new home, you pay VAT (5%) on materials, contractor services, and other construction-related expenses.

To encourage homeownership, the UAE Federal Tax Authority (FTA) allows UAE nationals to claim back this VAT. It applies only when you build the home for yourself or your family, not for commercial or rental purposes.

Example:

  • If you spend AED 1,000,000 building your villa, with AED 50,000 as VAT, you can apply to get that AED 50,000 refunded.

What Counts as a “Residence” Under VAT Rules?

Not every building qualifies. For VAT refund purposes, a residence must:

  • Be a newly constructed building used as a private home.
  • Have essential living areas – kitchen, bathroom, and sleeping areas.
  • Not be a hotel, serviced apartment, guest house, or any building used for commercial purposes.

Example:

  • A villa or townhouse you build for your family qualifies.
  • A rental apartment block or a hotel-style serviced apartment does not.

Who is Eligible for the VAT Refund?

You can apply if:

  • You are a UAE national (you’ll need to provide your Emirates ID and Family Book).
  • The building is for you or your immediate family to live in.
  • It is a newly built property (not a renovation or extension).
  • It is not intended for business, rent, or commercial use at the time of applying.

When Should You Apply for the VAT Refund?

Timing is crucial.

  • You must apply within 12 months of the home’s completion.

Completion is defined as the earlier of:

  • The date you receive the building completion certificate from the municipality.
  • The date you move into the home.

Tip: If you miss this deadline, your application could be rejected.

What Expenses Are Eligible for the VAT Refund?

You can claim VAT on expenses directly related to the construction of your home, such as:

  • Construction materials – cement, tiles, wood, steel, wiring, doors, windows.
  • Contractor and engineering services – builders, architects, engineers, supervisors.
  • Utility connection charges – water, electricity, telecommunications (initial connection).
  • Municipality fees – building permits, inspection fees.

What Expenses Are NOT Eligible?

Certain costs cannot be refunded, including:

  • Furniture & appliances – sofas, beds, curtains, washing machines, refrigerators.
  • Luxury additions – swimming pools, gym equipment, smart home systems.
  • Landscaping – gardens, trees, outdoor décor.
  • Maintenance and repairs done after completion.
  • Purchase of land itself.

Why? Because these are considered add-ons or personal choices, not part of essential construction.

How to Apply for the VAT Refund: Step-by-Step

Applying is done online via the FTA’s EmaraTax portal.

  1. Register on the FTA Portal
    Create an account on the FTA website. If you already have one, log in.
  2. Access the VAT Refund Section
    Go to “Special Refunds” > “New Residence VAT Refunds”. Click “New Refund Request”.
  3. Complete the Application Form
    Fill in your personal details and property information.
  4. Upload Required Documents
    • Emirates ID and Family Book.
    • Title deed proving ownership of the land/property.
    • Completion/occupancy certificate from the municipality.
    • Construction contracts and all VAT-compliant invoices (with supplier TRNs).
    • Proof of payment (receipts, bank transfers).
    • Utility connection documents.
    • IBAN letter from your bank.
    • (All documents should be in Arabic or officially translated.)
  5. Submit & Wait for Review
    The FTA may request additional documents. Once approved, the refund is credited to your bank account in 20–45 working days.

Checklist Before Submitting Your Refund Form

  • Are all invoices VAT-compliant (with supplier TRNs)?
  • Have you included all proof of payments?
  • Did you mention retention payments? (These are amounts you pay to contractors after completion. You can submit a second refund claim for these within 6 months of payment.)
  • Are documents clear, valid, and translated where necessary?

Red Flags & Pro Tips

  • Incomplete invoices (missing TRNs) = likely rejection.
  • Delays in applying = missed refund opportunity.
  • Using property commercially after claiming = you may need to repay the VAT.

Pro Tip: Hire a tax consultant like Miqat Chartered Accountants to review your documents. It can save you weeks of back-and-forth with the FTA.

Conclusion

Building a home is one of the biggest investments you’ll make. The UAE VAT refund scheme ensures you don’t pay more than you should on construction costs.

With proper documentation and timely filing, you can recover thousands of dirhams – money that can go back into furnishing your dream home.

Need help preparing a flawless application? Miqat Chartered Accountants specializes in VAT refunds for UAE nationals. We’ll handle the process, so you get your refund quickly and hassle-free.
Contact us today to start your claim.

FAQs

  1. What if I rent out or use the property commercially later?
    You’ll need to repay the VAT refund you received because the scheme is only for personal residences.
  2. How long does the refund take?
    Typically 20–45 business days, depending on document accuracy.
  3. What other VAT refunds are available in the UAE?
    Tourist refunds, business refunds on exports, and refunds for foreign governments/organizations.
  4. Why did the UAE introduce this scheme?
    To support Emiratis in achieving homeownership and reduce the financial burden of VAT on essential housing.
  5. Do I really need a professional to file my claim?
    Not mandatory, but highly recommended to avoid errors and speed up approval.