All residential properties sales & leases will be exempted from value-added tax (VAT) in the UAE, but not commercial properties, according to tax consultants who attended a VAT briefing by the Ministry of Finance (MoF).
The briefing for advisers took place last week, ahead of a nationwide awareness campaign with the MoF which will educate various stakeholders on the collection of VAT.
The UAE is set to implement 5 percent VAT from January 1, 2018.
“Bare land will also be exempt from VAT,” he added.
Exemption of property sales and rental income will boost the real estate market, particularly in Dubai, which last year reported total real estate transactions worth $70.5 billion (AED259 billion), which included 41,776 sales deals and 15,000 mortgage transactions.
In the briefing, MoF officials also confirmed the UAE and some unnamed other Gulf Cooperation Council (GCC) member states were still on track to implement VAT from January 1, 2018, with the UAE likely to release its domestic VAT law before the end of the first half of 2017, and detailed executive regulations to follow shortly after.
Under the GCC VAT framework agreement, member states who do not commence on January 1, 2018, will have up to one year to introduce VAT, the ministry official said.
Time and resources are increasingly becoming very scarce and immediate action is required to come to terms with the implications of VAT.