UAE to exempt residential property from VAT

Ministry of Finance adds that supplies of commercial properties will still be taxable

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The UAE government has decided to exempt residential property, undeveloped land, certain financial services and local transport from the 5% value-added tax (VAT) that is to be introduced from January 1, 2018.

In a statement posted on its website, the Ministry of Finance said that despite the exemptions, supplies (including sales and leases) of commercial properties will be taxable at the standard VAT rate.

“On the other hand, supplies of residential properties will generally be exempt from VAT. This will ensure that VAT would not constitute an irrecoverable cost to persons who buy their own properties,” it added.

The implementation of the GCC-wide VAT tax will boost GDP by 1.5% or more, the IMF has said.

According to Sultan Al Mansouri, the Minister of Economy, the UAE could see $3.26 billion generated through VAT in its first year, while $5.44 billion could be generated in the second year, a report in the National said.


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