Residential properties exempt from VAT in UAE

UAE Ministry of Finance Undersecretary Younis Al-Khouri said the sale and lease of residential properties would be exempt from the new VAT which will be levied starting next year.

“Commercial real estate, whether for sale or for rent, will be taxable, and the sale of the property for the first time will be zero interest,” Khoury said in remarks published by the government daily Al-Khaleej today.

According to the newspaper, the Ministry of Finance is currently studying the possibility of setting up a tax-free system for tourists, as exists in a number of other countries including the UK.

Read more: UAE VAT will not exceed 5% in UAE

UAE minister of state for financial affairs announced earlier this month that GCC countries would introduce value added tax on purchases, adding that 100 products would be exempt from the levy. An official law is expected to be passed in the first half of this year ready for the implementation of the law at the start of 2018.

The minister said the UAE would impose a tax at no more than five per cent.

International accounting firm Ernst & Young has estimated that the tax could generate revenues of over $25 billion a year for Gulf states which are reeling as a result of the slump in petrol prices on the global market.