The_impact_of_VAT_on_Property_Sectors_in_UAE

<strong>The</strong> <strong>impact</strong> <strong>of</strong> <strong>VAT</strong> on Property Sectors in UAE
UAE is one <strong>of</strong> the most important business destination in the world. In recent, Value Added
Tax (<strong>VAT</strong>) plays a major role in each and every business in UAE. Value Added Tax, it’s a
kind <strong>of</strong> indirect tax which has to be paid by the residents in UAE. <strong>VAT</strong> will not only make an
effect on consumers and end-users but also make a huge <strong>impact</strong> on business and
commercial establishments in Emirates. <strong>The</strong>re are a lot <strong>of</strong> businesses established and
growing rapidly in UAE. <strong>The</strong> property sector is one <strong>of</strong> the vital industry which must be taken
into keen consideration while implementing Value Added Tax (<strong>VAT</strong>) in UAE.
<strong>The</strong> Rise in Demand <strong>of</strong> Properties in UAE due to <strong>VAT</strong>
As <strong>of</strong> an increase in the price by 5% due to the implementation <strong>of</strong> the <strong>VAT</strong>, the properties in
UAE might have a reasonable demand at least for a short span. As per the information
gathered from the Ministry <strong>of</strong> Finance, <strong>VAT</strong> in UAE for the property sectors will be given a
slight high consideration. While differentiating the property sectors as residential and
commercial, there will be a difference in the implementation <strong>of</strong> the <strong>VAT</strong>. As <strong>of</strong> the residential
rent in UAE are exempted from the <strong>VAT</strong>. So, there will be not an increase in rent in the name
<strong>of</strong> <strong>VAT</strong> implementation in UAE.
Immediately after the construction <strong>of</strong> property, the first sale <strong>of</strong> any residential property is
exempted from paying <strong>VAT</strong>. Due to this huge <strong>impact</strong>, the cost <strong>of</strong> construction and the price
<strong>of</strong> residential property will not be increased.
<strong>The</strong> Role <strong>of</strong> <strong>VAT</strong> in UAE for Commercial Properties
While coming to the point <strong>of</strong> commercial properties, the <strong>impact</strong> <strong>of</strong> <strong>VAT</strong> will not be as the
same as residential properties. As <strong>of</strong> that, there will be 5% <strong>VAT</strong> while making up for the sale
<strong>of</strong> commercial properties in UAE. <strong>VAT</strong> implementation on commercial properties will be also
applicable for the least sale <strong>of</strong> properties. <strong>The</strong>refore, the <strong>impact</strong> <strong>of</strong> <strong>VAT</strong> in UAE will have a
major <strong>impact</strong> only on Commercial properties and not with Residential properties. But, the
commercial property owners and the companies can be able to claim the initial amount paid
for <strong>VAT</strong> through the rent made for their commercial properties.
For your notice, the sale <strong>of</strong> bare land will not have any <strong>of</strong> <strong>impact</strong> due to <strong>VAT</strong> implementation
in UAE.