Construction & real estate

VAT impacts different economic sectors in different ways. Contractors and sub-contractors supplying goods and services in relation to new construction contracts must carefully assess the nature and form of supply and apply the correct VAT rate. Contractors and sub-contractors should consider the VAT implications for retention payments, snagging works and any other supplies made after the completion of the project. For GCC funded projects, while supplies made by the identified main contractors will be zero-rated, regardless of the nature of supplies, sub-contractors must assess whether their supplies will be eligible for the zero-rating as construction services in relation to new buildings. For real estate owners, it is critical for them to examine the terms of their agreements with tenants for assigning the appropriate VAT treatment to various components of the monthly payments received from tenants. An entity making taxable supplies in addition to exempt real estate supplies must identify common overhead expenses for adjusting input tax using the standard apportionment method.

Our construction & real estate VAT specialists will assist you to navigate through the complexities and challenges by providing the right advice with practical solutions to the challenges faced by this sector.