Tax Alert – FTA issues revised VAT refund guide for UAE nationals building new residences

Overview

The Federal Tax Authority (FTA) has issued a fully revised April 2026 version of its VAT Guide VATGRH1 – VAT Refund for UAE Nationals Building New Residences. The guide explains how UAE nationals can claim a refund of VAT incurred on constructing a new residence that is not part of a business, under Article 66 of the VAT Executive Regulation. The update aligns the process with EmaraTax and the Maskan app, adds examples, and includes a new “common errors” section.

Legal framework and status

The guide is based on:

• Federal Decree‑Law No. 8 of 2017 on VAT, as amended.
• Cabinet Decision No. 52 of 2017 (VAT Executive Regulation), in particular Article 66 on the New Residences Refund Scheme.
• Federal Law No. 28 of 2022 on Tax Procedures and Cabinet Decision No. 74 of 2023 (Tax Procedures Executive Regulation).

The guide is not legally binding and does not constitute tax or legal advice; taxpayers must still consider the legislation and their specific facts.

Who can claim and what is a “residence”?

Eligible persons

• Only a natural person who is a UAE national and holds “Family Data” may submit a Refund Request.
• From 2024, the Family Book is replaced by digital Family Data, which must show the UAE national’s family members and place of birth.

Definition of “residence”

For the scheme, a “residence” is:

• A newly constructed building (including villas and townhouses),
• Used predominantly as a private home of a natural person,
• Including fixtures and fittings, and comprising at least cooking, washroom/bathroom and sleeping facilities.

Extensions/second units on the same plot may qualify if they include sleeping, washroom and cooking facilities and can function as an independent private residence.

The following normally do not qualify:

• Later additions such as a playroom, a majlis or kitchen only extension, or a garage/car port built after completion.
• Commercially registered buildings such as hotel apartments, serviced apartments and guest houses.

Limited home office or study use does not affect treatment as a residential building if only a small proportion is used for such purposes.

Eligible expenses – what is in and what is out?

Usage condition

Expenses must relate to a newly constructed building that will be used solely as the residence of the applicant and/or his or her family.

If the building is later used for another purpose (e.g. leased out), the UAE national must notify the FTA and may need to repay the VAT refund.

Nature of expenses

VAT can only be refunded on:

• Building materials normally incorporated in the residence or its site (excluding furniture and electrical appliances).
• Services of contractors – including builders, architects, engineers and similar services necessary to complete the construction.

Transport costs and clearing agent fees on imported building materials are refundable where directly linked to materials used for the new residence. Goods are treated as incorporated where they are fixed such that removal needs tools, remedial works or causes damage.

Examples – eligible (Appendix 1):

• Bricks, cement, tiles, timber, decorating materials (e.g. paint).
• Built‑in kitchen units, sinks, worktops, fitted cupboards.
• Central AC and split units, light fittings, power points, plumbing materials.
• Doors, window frames and glazing, flooring (excluding loose carpets).
• Fire and burglar alarms, smoke detectors, fencing, solar panels.
• Supervisory services, architects, builders, engineers and similar services.

Examples – not eligible:

• Loose furniture and curtains, loose carpets.
• Electrical/gas appliances (ovens, fridges, freezers, dishwashers, washing machines, dryers, microwaves, coffee machines).
• Smart light bulbs and audio/IT equipment (CCTV, speakers, satellite boxes, telephones, freeview boxes).
• Children’s play structures, garden furniture and ornaments, sheds.
• Landscaping (trees, grass, plants), swimming pools and spas.

Attachments or detached structures are not refundable unless they themselves satisfy the residence definition.

Time limits – 12 months and retention window

12‑month deadline

A Refund Request must be submitted within 12 months from the date of completion of the new residence.

The date of completion is the earlier of:

• The date the residence is occupied;
• The date the Building Completion Certificate is issued; or
• A date stipulated by the FTA in specific cases.

The applicant must obtain and retain documentary evidence of the actual date of occupation.

Exceptions to the 12‑month rule

In limited cases, an alternative completion date may be accepted where events make it impossible to apply within 12 months, for example:

• Absence from the UAE due to military service or illness.
• Legal disputes relating to the residence.
• Further work required to resolve technical issues so the building is truly ready for occupancy, even after the completion certificate has been issued.

This must be supported by official documents, consultant affidavits, utility delivery/activation documents or similar evidence, is subject to review by the Verification Body, and remains at the FTA’s discretion.

Retention payments – second claim

Where retention payments fall after the 12‑month period:

• The UAE national should flag retention payments in the initial application.
• A subsequent Refund Request can be filed for VAT on retention, within 6 months from the retention payment date.
• The request must include proof of payment, and multiple retention payments can be consolidated, provided the request is submitted within 6 months of the first retention payment.

Practically, this allows one claim per residence plus a separate retention‑related claim.

Digital process – EmaraTax and Maskan

Submission channels

All New Residence VAT Refund applications must now be submitted via EmaraTax or the Maskan app.

• EmaraTax is the FTA’s digital tax platform.
• Maskan is a smart application dedicated to UAE nationals building new residences.

Both systems are synchronised, and the April 2026 guide has been updated specifically to reflect this digital journey.

Maskan functionality

The guide highlights that Maskan enables UAE nationals to:

• Record tax invoices during construction.
• Generate a barcode that suppliers can scan to link invoices directly to the applicant’s account.
• View an estimated VAT refund based on recorded costs, subject to eligibility and verification.

Maskan is available on Google Play and the Apple Store.

Documentation, verification and corrections

Key documentation

The applicant must submit, among others:

• Emirates ID and Family Data.
• Building permit, completion certificate and site plan.
• Evidence of land ownership.
• Bank letter on letterhead showing name, bank and IBAN (screenshots are not accepted).
• Power of attorney and/or court permission when acting on behalf of others (e.g. co‑owners, minors).

The FTA or Verification Body may request additional documents such as architectural drawings, construction/consultancy contracts and addenda, variation orders, tax invoices, credit notes and proof of payment.

Tax invoices must:

• Include the owner’s name, valid TRNs and correct VAT amounts.
• Not be simplified tax invoices.
• Where issued to a related party/consultant/contractor/agent, clearly state they are for the use of the applicant and show plot or address details, plus confirmation that the intermediary does not recover input VAT on the same invoice.

Alternatively, invoices may be accepted where they show the full name of the UAE national, signature and Emirates ID acknowledging the cost was incurred on his/her behalf, together with the full plot number or address.

Processing timeline

Once all required documents are submitted, the FTA indicates that reviewing and refunding VAT can take up to 20 business days.

Over‑claimed refunds

If the applicant discovers that the refund was overstated, they must submit a Voluntary Disclosure under Article 10(2) of the Tax Procedures Law.

Common errors identified by the FTA

The guide lists frequent errors and practical reminders:

• Inconsistent data between the application and supporting documentation (e.g. Emirates ID, permits, bank details).
• Uploading IBAN screenshots instead of a formal bank letter on letterhead.
• Failure to attach the completion certificate issued by the municipality, where applicable.
• For multiple‑owner properties, not including a Power of Attorney authorising a single owner to receive the refund.

Using this list as a pre‑submission checklist can significantly reduce delays or rejections.

Key Takeaways

• The FTA’s April 2026 VATGRH1 guide provides a simplified, fully updated framework for VAT refunds to UAE nationals building new residences, aligned with EmaraTax and Maskan.
• It clarifies eligibility, the definition of “residence”, the scope of refundable expenses, and time limits – notably a 12‑month submission deadline and a 6‑month retention payment window.
• The guide sets stricter expectations on documentation, invoice content, and use of Voluntary Disclosures, and highlights common errors that applicants and advisors should proactively address.