Investors with commercial realty need to clear VAT dues
More so if they have plans to proceed with any transfer of ownership, says
FTA
Investors must clear their VAT dues on the sale or rental of commercial
properties before proceeding with any transfer of ownership.
However, taxes paid on the property’s expenses during a rent period can be
recovered through the tax return of the tenant if he is registered and
entitled to a refund. It is also possible to recover the entirety of taxes
incurred on construction purchased according to the capital assets system,
if the cost of the property is more than Dh5 million.
“With the exception of selling unrented commercial property and rental
contracts for commercial units, all other property is either not subject to
or exempt from the 5 per cent VAT rate on businesses,” said Khalid Ali Al
Bustani, Director-General at the Federal Tax Authority.
“Owners who rent out their estates for residential purposes are not required
to register with the Authority. All supplies that fall under an exempt
category do not require registration in the tax system.
“Federal Decree Law No. (8) for 2017 on Value Added Tax and its Executive
Regulations maintains the competitiveness of real estate investment.” The
FTA also clarified that rented commercial property is not considered a
supply when sold to taxable persons.
