VAT Refunds for UAE Nationals Building New Residences

What’s new in the June 2026 FTA Guide and why it matters

The Federal Tax Authority (FTA) has released an updated version of the VAT Guide for UAE nationals constructing new residences (June 2026), building on the comprehensive revision issued in April 2026. While the overall framework of the New Residences Refund Scheme remains unchanged, the latest version provides clearer and, in many respects, more favourable treatment of certain expense items by aligning the guide with the recently issued FTA Decision No. 5 of 2026.

This development is important for UAE nationals and advisors because it directly affects which construction‑related costs can be brought into scope for VAT recovery under the scheme, particularly for projects undertaken or invoiced in 2026.

1. Core scheme unchanged, guidance refined

The June 2026 updated Guide retains the same basic structure and concepts introduced in April 2026 Guide:

• The New Residences Refund Scheme continues to allow UAE nationals to recover VAT incurred on qualifying goods and services used in constructing a new residence occupied by the applicant and/or their family.
• Key definitions such as “residence”, “eligible persons”, and “eligible expenses” remain consistent, including the requirement for minimum cooking, bathroom, and sleeping facilities.
• The process still runs through EmaraTax and the Maskan application, which are synchronised, with independent Verification Bodies supporting the FTA’s review.
• The one-refund-per-residence rule remains, with a second refund request permitted only in relation to retention payments.
• The 12‑month completion deadline and the conditions for using an alternative completion date in exceptional circumstances are unchanged.

From a compliance perspective, this continuity means that taxpayers and advisors can rely on the procedural understanding developed under the April 2026 version, while turning their attention to the way the June 2026 version reshapes the detail around eligible expenses.

2. Formal incorporation of FTA Decision No. 5 of 2026

The major conceptual enhancement in June 2026 is the formal integration of FTA Decision No. 5 of 2026 into the Guide’s legislative framework. That decision adds specific items to the list of expenses that may qualify for VAT recovery when constructing a residence, effective from 1 January 2026.

Practically, this is implemented through a revised Appendix 1 in the June 2026 Guide. The appendix has been re‑worked to:

• Expand the list of expense items that can qualify for VAT refund.
• Clarify previously grey areas where items were either treated as not eligible or not expressly addressed.
• Reaffirm that all newly listed items are still subject to the overarching conditions of the scheme (e.g., residential use, non‑commercial, embedded into the structure).

The April 2026 Guide did not yet reflect this decision. Its Appendix 1 contained a narrower, more conservative list of eligible items and treated certain categories—such as landscaping, swimming pools, and some smart systems—as not eligible. The June 2026 Guide therefore represents a genuine broadening and clarification of scope rather than a cosmetic update.

3. Key differences in eligible expense categories

The most meaningful changes between April and June 2026 are in the treatment of specific categories of expenses. In summary:

1. Landscaping within the plot

• Previously, landscaping such as trees, grass and plants was explicitly listed as not eligible.
• Now, landscaped agricultural areas within the boundaries of the land are recognised as eligible where all conditions are met.
• This lends support to refund claims on structured, integrated landscaping that forms part of the overall residential environment, rather than purely decorative garden features.

2. Swimming pools and decorative water features

• Under the April 2026 Guide, swimming pools and spas were listed as not eligible.
• The June 2026 Guide now includes swimming pools, fountains and domestic decorative water features as eligible items.
• Given the cost of these items in typical UAE villa projects, this change can materially increase the potential VAT refund, provided they are part of the residence rather than a commercial facility.

3. Smart and security systems

• The earlier guide referred to smart system fittings integrated into the residence but treated many related components cautiously, with several exclusions such as smart lightbulbs and certain devices.
• The June 2026 Guide explicitly recognises smart and security systems, and their accessories, that are fixed and integrated within the residence as part of a complete system as eligible.
• This clarifies the position for modern home automation and security installations, as long as they are structurally embedded and integrated.

4. Garage doors, gates, and carports attached to the residence

• Previously, “garage and car shading attached to the residence” were mentioned as eligible, but the treatment of gates and carports could be less explicit.
• The updated guide specifically includes doors and electronic or smart doors and gates for the residence, garage and carports attached to the residence as eligible.
• This gives a clearer basis to claim VAT on integrated garage/carport structures and their fixed access systems.

5. Dedicated guards’, drivers’ or domestic maids’ rooms

• The April 2026 Guide did not specifically list such spaces as eligible and they could be viewed under general rules for ancillary structures.
• The June 2026 Guide explicitly lists a dedicated extension for a security guard’s room, driver’s room or domestic maid’s room as eligible, subject to the general conditions.
• This is significant given the prevalence of such rooms in UAE residential designs and confirms their treatment as part of the residential environment.

6. Gyms and playrooms

• Earlier guidance clearly excluded children’s play equipment, garden furniture and other movable items.
• The latest guide distinguishes between moveable equipment and structural rooms by listing a gym or playroom (as a room integrated into the residence) as eligible while still excluding loose play structures and furniture.
• This helps taxpayers correctly differentiate between structural works and movable assets.

7. Reconstruction, demolition and rebuilding

• The April 2026 version did not explicitly address reconstruction works in the list of eligible items.
• The June 2026 version now includes reconstruction works, including demolition and rebuilding, as eligible where they fall within the broader conditions of the scheme.
• This supports refund opportunities in substantial renovation projects that effectively result in a rebuilt residence.

Across all these categories, the June 2026 Guide consistently emphasises that items are only eligible where they form part of the residence and meet the existing tests for incorporation into the building (e.g., removal would require tools, remedial work or cause damage). Movable furniture, portable appliances and standalone decoration remain outside the scope.

4. Practical implications for claim planning and documentation

For UAE nationals and advisors, the June 2026 Guide has several practical consequences:

Broader refund potential for 2026 projects

• Because the newly recognised items are effective from 1 January 2026, expenses incurred in 2026 that fall into the expanded categories can now be brought into VAT refund calculations, assuming all scheme conditions are met.

Need to revisit expense classifications

• Claims prepared strictly under the April 2026 guidance may have excluded items that are now eligible. Advisors should consider reviewing ongoing or planned claims to identify landscaping, pools, smart systems, ancillary rooms and reconstruction works that can now be legitimately included.

Importance of precise invoice descriptions

• As the scope widens, it becomes even more important that invoices and contracts clearly describe the nature of works, emphasise their embedded, structural character, and link them to the residence and plot. Vague descriptions make it harder to demonstrate eligibility.

Continued focus on documentation quality

• The documentation requirements—Emirates ID, Family Data, completion certificates, site plans, ownership evidence, bank letters, contracts, architectural drawings, variation orders, and detailed tax invoices—remain central to the refund process. The broader scope of eligible items means Verification Bodies will rely heavily on the quality and clarity of these documents to validate claims.

Advisors should also be alert to situations where voluntary disclosures might be required, especially if past claims are found to have overstated or understated the refund in light of the more precise guidance.

5. Key takeaways

• The June 2026 FTA Guide keeps the existing structure and mechanics of the New Residences Refund Scheme but meaningfully expands and clarifies which construction‑related expenses may qualify for VAT refunds.
• FTA Decision No. 5 of 2026, now embedded into the Guide, brings landscaped agricultural areas, swimming pools, decorative water features, integrated smart and security systems, doors and gates for garages and carports, dedicated staff rooms, gyms/playrooms and reconstruction works into clearer, and often newly eligible, scope.
• The long‑standing distinction between embedded structural elements and loose or portable items remains critical: movable furniture, standalone garden ornaments, play equipment and portable appliances continue to be excluded.
• UAE nationals and their advisors should revisit projects and claims from 1 January 2026 onwards to ensure all eligible items are considered, properly documented and correctly presented via Maskan and EmaraTax.
• Strong documentation and well‑structured invoices will be increasingly important in demonstrating that newly recognised items genuinely form part of the residence and meet all legislative and procedural conditions.