The first sale of new homes will be taxed at 0%. Which means developers will be able to claim back any VAT they needed to pay to the government. Commercial tenants can expect to pay VAT at 5%.
Commercial developers may want to consider the one-off costs of setting up shop as a taxpayer. They must keep in mind that it may include software and staff training to ensure compliance and reduce the risk of penalties from a VAT audit.
The good news is that according to Sultan bin Saeed Al Mansouri, UAE Minister of Economy, the VAT may generate Dh12 billion in its first year and Dh20 billion in its second. This money may be reinvested in domestic infrastructure projects that could draw more people to the UAE and attract more people to the real estate market.
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