The UAE has said citizens have reclaimed Dh3.2 billion ($871 million) in VAT refunds for building new residences as of June, after the launch of the service eight years ago, as the country implements new tax initiatives and reforms.
The total number of approved applications for VAT refunds related to new residences for UAE citizens reached about 38,000, the Federal Tax Authority said on Sunday.
This is up more than 22 per cent from the 31,000 approved applications and nearly 26 per cent higher than the Dh2.54 billion in June 2024. In the first half of this year, 3,097 new applications were approved, resulting in cumulative refunds of Dh284.77 million, the FTA said.
The UAE introduced 5 per cent VAT on most goods and services in January 2018 as part of its plans to diversify and reduce economic dependence on oil.
When a UAE citizen owns or acquires land in the UAE on which they build or commission the construction of their own residence, they can claim for a VAT refund incurred on the development.
Tax refund options for tourists
The FTA also said it is continuing to expand the digital tax refund system for tourists, with the number of registered retail outlets connected to the system rising to 18,410 shops by the end of June. That is up from 17,720 shops at the end of 2024 and the 17,080 six months earlier.
The total number of outlets that have joined the digital tax refund system for tourists in the past two years stands at 3,390.
The VAT refund scheme for tourists has been available in the Emirates since November 2018. Tourists who spend at least Dh250 on purchases can claim their refunds at designated outlets before leaving the country. The UAE also introduced a paperless tax refund system in 2022 for tourists visiting the country, doing away with the need to retain receipts.
In June 2019, the country launched fully automated self-service kiosks across the country to support tourists to claim VAT refunds before departing the UAE. The number of the machines at malls and hotels that automate the tax refund process for tourists, taking only two minutes per transaction, was 96 as of the end of June, the FTA said.
In December, the authority launched the e-commerce purchases VAT refund system for tourists during their stay in the UAE.
The authority plans to continue to introduce various projects to digitally transform the tax sector in line with the government’s strategy to reduce bureaucracy and maintain customer satisfaction, said Khalid Al Bustani, the FTA's director general.
“Among the key initiatives in this area is the ‘Maskan’ smart application, which enhances the ease and convenience of VAT refunds for Emiratis, and relies on paperless procedures with 100 per cent fully digitised procedures," he said.
