FTA expands VAT refund for new citizen homes to cover wider range of construction payments
UAE Federal Tax Authority widens VAT refund for new citizen homes, estimating AED200m in savings for over 8,000 citizens and updating digital claims from Jan 1, 2026.
The Federal Tax Authority (FTA) has expanded the scope of the VAT refund for new citizen homes, allowing a broader set of construction-related payments to be reclaimed by Emirati homeowners. The policy change, which the FTA says entered into force on January 1, 2026, is presented as part of wider support measures aligned with the Year of the Family. Officials estimate the widening of eligible expenses will yield about AED200 million in VAT savings for more than 8,000 citizens, averaging roughly AED25,000 per approved claim.
Details of the FTA announcement
The FTA announced that the new measures permit refunds of VAT paid on additional items and works that form part of a newly built residence or its immediate fixtures. The authority clarified that eligibility requires the items to be constructed on the same plot and to serve the private residential use of the home or its family members. The expansion is intended to reduce upfront costs associated with owning a new home and to improve affordability for citizen builders.
Projected financial impact and demand
According to FTA projections, the total value of approved refund requests could exceed AED1 billion in 2026, up from about AED754 million in 2025. The Authority expects more than 8,000 citizens to benefit directly from the change, producing an estimated AED200 million in aggregate VAT savings. These figures reflect both higher per-application recoveries and an anticipated rise in the number of approved claims following the policy expansion.
Newly eligible construction payments
The expanded list of eligible payments includes ancillary rooms such as guard, driver or domestic helper quarters, private gyms and games rooms, and integrated security and smart-home installations. Also covered are electronic or smart entry doors for the residence and any designated parking area, as well as domestic swimming pools, decorative fountains and other ornamental water features. The FTA additionally confirmed that costs associated with demolition and full reconstruction of a dwelling — including demolition and rebuilding works — and on-plot agricultural spaces will be eligible when they form part of the newly constructed residence.
Digital service updates and documentation requirements
The FTA has updated its online citizens’ VAT refund service to incorporate the newly eligible payments and streamline submission workflows. Applicants must still meet the standard eligibility criteria and supply the required supporting documents with each claim, the Authority said. The update aims to simplify verification and reduce processing times by aligning the digital forms with the expanded expense categories and by clarifying the documentary evidence needed for each type of item or work.
Community outreach and citizen engagement plans
To raise awareness of the expanded refund scheme, the FTA plans a nationwide programme of community meetings and dialogue sessions in all emirates, to be held in local majlis and neighbourhood councils. Those sessions are intended to explain the initiative’s benefits, walk citizens through application steps, and gather feedback to improve service delivery. The Authority emphasized that direct engagement will help ensure citizens understand eligibility conditions and the documentation required to support successful refund requests.
Policy rationale and official comments
Abdulaziz Mohammed Al Mulla, Director General of the FTA, framed the initiative as part of the government’s broader efforts to support families and promote home ownership. He said the measure aligns with leadership directives to provide comprehensive support and high-quality services to citizens, and with national priorities to strengthen social stability and wellbeing. The FTA stressed that the expansion targets items genuinely integrated into the new residential unit and intended for the private use of the household.
The expanded VAT refund for new citizen homes is expected to lower some construction-related expenses for Emirati homebuilders while prompting a rise in refund applications throughout 2026. The FTA’s digital updates and outreach programme aim to facilitate uptake, though successful claims will continue to depend on meeting the specified conditions and submitting appropriate evidence.
