Applicability of VAT on commercial property and real estate in UAE

Any person who has recently purchased a new property in the UAE for commercial use or renting purposes, should register for VAT. For registration of VAT, a taxable person can seek the help of a tax expert in UAE. VAT experts can help you throughout the VAT registration process:

Step 1 Assess which commercial or real estate properties are taxable

  • Commercial properties in the UAE, whether leased out or sold, including, are taxable, unless provided they are for residential use.
  • Any Non-Resident property owners and/or tenants cannot escape 5 per cent VAT for commercial property. If the landlord and tenant are both non-residents, the landlord has to register for VAT if the property is in the UAE.
  • Lease incentives, such as free office fit-outs, could be subject to VAT.
  • VAT will also be applicable to rents payable under commercial rental contracts.
  • Any property, which is not fixed to the ground and hence movable, would also be considered commercial for VAT purposes. Mobile homes, for example.

Step 2 Determine your eligibility to register for commercial properties

  • If the value of taxable supplies exceeds AED 375,000, business can undergo for mandatory VAT registration.
  • If taxable supplies exceed AED 187500 to AED 375000, then the company can undergo for voluntary VAT registration.

If you want to know more about the threshold limits you can seek the advice of a VAT expert in UAE.

Step 3 Submit Details to tax experts

  • Details of the applicant

Supply the details of the person who is operating the real estate business. whether he is an individual or business, details of the applicant must be submitted to the tax experts.

  • Supply Details regarding VAT amount 

The applicable VAT amount on the sale of the property should be declared (mentioned in the tax invoice provided by the seller.)

  • Seller’s TRN 

The Tax Registration Number of the seller should be furnished to the tax expert as, mentioned in the tax invoice.

  • Details of Property number 

The official property number as provided by the seller or the land registration department should be furnished.

  • Date of purchase

This is the purchase date of the commercial property as mentioned on the tax invoice.

After providing the above-mentioned details to a tax expert, they will forward all the information to FTA which will scrutinize the information provided. After the approval, the entity is registered for VAT in UAE.

As per the Federal Tax Authority a taxable person also requires additional documents or authorization, depending on the business activity, the jurisdiction of business and more such factors.

Also Read: What are the responsibilities of tax agent in UAE?

Consequences for non-registration of VAT for commercial property

A commercial property owner that misses the VAT registration cutoff date or fails to complete the VAT registration process under the deadline set by Federal Tax Authority must settle a fine not less than AED 20000 (estimated fine) To determine exact penalties seek guidance of a VAT consultant in UAE.

VAT registration services in UAE

You can seek the help of our VAT experts in UAE, as they can help you register VAT for commercial property. We give necessary VAT related information and also provide full-fledged assistance with regards to VAT; we are right here to make VAT registration a smoother experience for businesses. Call us now for further consultation.