Understanding the VAT Refund Scheme for UAE Nationals Building New Residences

Building your dream home is a significant milestone for UAE Nationals. To support this journey, the Federal Tax Authority (FTA) offers a specialized VAT Refund Scheme. This document explains how to claim VAT refund in UAE, breaking down the eligibility criteria, eligible expenses, and the application process to help you recover VAT incurred during the construction of your new residence. 

CLA Emirates provides specialized tax advisory services to ensure you successfully secure your VAT refund in UAE during the construction of your new residence. 

What is the New Residences Refund Scheme? 

If you are a UAE National, building or commissioning the construction of your own residence in the UAE, you may be entitled to a special UAE VAT refund on specific construction-related expenses. This scheme is designed to make homeownership more accessible for citizens. 

Are You Eligible? 

To apply for this refund, you must meet the following criteria: 

• You must be a UAE National. 

• You must hold “Family Data” (the digital alternative to the Family  Book). 

• The building must be used solely as a private home for you and/or your family. Buildings used for commercial purposes, such as guest houses or hotels, do not qualify. 

What Expenses are Eligible? 

You can recover VAT on expenses related to the construction of your new residence. This includes: 

• Building materials that are incorporated into the structure (e.g., cement, bricks, tiles). 

• Professional services provided by contractors, architects, and engineers. 

• Fixtures that are fixed/attached to the building, such as kitchen sinks, central air conditioning, fire alarms, and fitted cupboards. 

• As of 2026, eligible items now include swimming pools, dedicated rooms for domestic staff, and integrated smart security systems. 

Practical Scenarios: What Qualifies? 

Example 1: The Modern Villa 

A UAE National builds a villa and includes a state-of-the-art integrated security system and a swimming pool. Both items are eligible for a VAT refund because they are fixed and integrated parts of the new residence. 

Example 2: The Home Office 

If a small portion of your new home is used as a workspace or study, the building will still qualify as a residence, provided it remains predominantly a private home. 

Example 3: What Does NOT Qualify 

Items that are removable and not built into the structure, such as loose furniture (sofas, tables), free-standing kitchen appliances (fridges, washing machines) generally do not qualify. 

Example 4: Subsequent attachments or detached structures on the same plot: 

Separate building or structure build in the same compound with cooking, washroom, and sleeping facilities is subsequently built OR where an additional floor / level / extension with washroom and sleeping facilities as well as direct and easy access to cooking facilities is subsequently added to an existing residence, provided such addition can function independently as a private residence are also considered as eligible residence for VAT recovery. 

Example 5: VAT cannot be recovered on scenarios like: 

An extension to the residence consisting of only cooking facilities or Majlis without washroom and sleeping facilities, or a garage or car port built after the residence was already completed. 

How to Apply 

You can submit your application via the “Maskan” application or the EmaraTax platform. 

Key steps include: 

• Ensure you have your Emirates ID, Family Data, and a stamped bank letter with your IBAN. 

• Submit your request within 12 months from the date the residence is completed or occupied. 

• Once submitted, your application will be reviewed. You may be contacted by a Verification Body to provide additional documents (e.g., construction contracts, invoices) at no cost to you. 

How CLA Emirates can support you? 

At CLA Emirates, we specialize in tax advisory, helping UAE Nationals secure their VAT refund in UAE and navigate the intricacies of VAT regulations. We do not just guide you through the process; we perform a comprehensive audit of your construction expenses to ensure maximum eligible recovery. Our professional support includes: 

• Document Review: Verifying all invoices against FTA compliance standards to ensure they are complete and accurate. 

• Eligibility Filtering: Identifying which costs qualify for recovery—such as structural building materials, professional services, and permanently fixed items—while isolating non-refundable expenses like loose furniture. 

• Claim Submission: Preparing and submitting your VAT refund claim directly to the FTA, ensuring your application is optimized to minimize the risk of rejection or audit delays. 

Practical Example: AED 20 Million Residence 

Consider a scenario where a UAE National constructs a bespoke residence with total project costs of AED 20,000,000. 

• Total Project Expenditure: AED 20,000,000. 

• Estimated VAT Paid (at 5%): AED 1,000,000. 

How CLA Emirates Assists: Not all expenses in a 20 million AED project are automatically refundable. Certain items, such as loose furniture, appliances, or non-integral landscaping, may fall outside the scope of “construction services” as defined by the FTA. CLA Emirates conducts a detailed review of your total VAT pool. By identifying and isolating eligible structural and core construction costs, we ensure your claim is precise, defensible, and maximized. 

For more detailed information, please refer to the official VAT Guide for UAE Nationals Building New Residences available on the FTA website. For personalized guidance on your VAT refund, contact CLA Emirates.