Citizens’ refund of housing construction tax is not limited to one house

The Federal Tax Authority confirmed that citizens’ refund of the value-added tax paid for building their new homes is not limited to one home only, and is not linked to the existence of a maximum number of homes, as long as it is a personal home, not a commercial one for investment purposes.

The Executive Director of the Tax Compliance Sector at the Authority, Sarah Al-Habashi, said in a clarification on the Authority’s social media platforms that the citizen has the right to recover the tax on the construction of any new residence for himself or his family.

Al-Habashi explained that the tax refund is for the basic materials used in building the house itself, which are present in the structure of the residence, and the removal of which would affect the construction, meaning that the refund does not apply to materials that are considered luxury or aesthetic, such as electrical appliances, furniture, decoration supplies, lighting, curtains, etc., noting that these materials can be changed, and do not affect the structure of the house in any way, and therefore are not included in the tax refund.

Regarding the occasional problems that occur between the citizen and the consultant or contractor, and the citizen being forced to change either of them and the impact of that on the tax refund, Al-Habashi explained that in cases of disputes, and part of the house was completed by a contractor, and another part was completed by a second contractor, all invoices and receipts are accepted by the Federal Tax Authority regardless of the contractors, as long as there are signed contracts, stressing at the same time that no refund is accepted for any amounts paid to the contractor or consultant that are not recorded in invoices or receipts.

Al-Habashi stressed the need to pay attention to obtaining invoices to protect consumers in the country, noting that specific numbers have been allocated for complaints in the event that consumers face any refusal to obtain invoices, and that recourse is made to the relevant law enforcement authorities in the event of refusal to obtain invoices from the service provider.

She said that the tax refund will be within a maximum of one year from the date of issuing the housing completion certificate to citizens, explaining that the period has been extended to 12 months instead of just six months, as it was previously, because it allows for the completion of housing construction and making the necessary modifications, especially if problems occur during the construction process, and some families complete construction after the housing completion certificate is issued, especially with regard to completing the connection of basic utilities such as water, electricity, etc.

The Federal Tax Authority recently announced that the total number of applications approved by the Authority for citizens, both male and female, who refunded the value-added tax they paid on the construction of their newly constructed homes amounted to 30.92 thousand applications, with a total value of 2.54 billion dirhams, since the service began until the end of the first half of this year, compared to a total number at the end of the first half of 2023, which amounted to 23.34 thousand applications, with a total value of 1.54 billion dirhams, an increase of 32.45% in the number of approved applications, and 65.07% in the value of the refunded amounts during 12 months.

• The tax refund will be within a maximum of one year from the date of issuance of the housing completion certificate.