Some GCC states have announced their intention to implement VAT as early as 1 January 2018. Companies need to ensure they take action now to prepare. VAT will affect real estate companies in different ways and a wide range of business operations and services may need to be addressed.
The UAE's Ministry of Finance has not yet issued specific guidance in relation to VAT on residential and commercial property.
However, experience of VAT and goods and services tax (GST) systems in Singapore, Malaysia, Australia, and the UK suggest:
VAT recovery for residential development (if, for example, residential use is anticipated) is likely to be blocked, as are business inputs into the leasing of residential properties.
Real estate companies should also consider:
Other issues include:
If you require further information on VAT issues, please contact Rob Dalla Costa or any member of market-leading tax team.