AED2.45 Billion in Home-Construction Tax Refunds Approved by Federal Tax Authority

The Federal Tax Authority (FTA) has made headlines with its recent announcement of AED2.45 billion in tax refunds for Emirati homebuilders. This significant move has an impact on the housing sector and showcases the government’s commitment to supporting UAE citizens in their pursuit of new residences. The Tax Refund Scheme for home construction has gained traction, highlighting the FTA’s role in implementing citizen benefits and promoting housing initiatives.

As part of its ongoing efforts to enhance tax compliance and streamline government services, the FTA has approved a record number of applications for VAT refunds related to home construction. This development reflects the digital transformation in tax management and e-services provided by the authority. The surge in approved applications points to the effectiveness of the tax refund process and the growing awareness among UAE nationals about the housing system and tax regulations in place to support their homeownership goals.

Record-Breaking Tax Refunds for Emirati Homebuilders

Significant increase in approved applications

The Federal Tax Authority (FTA) has approved 30,920 applications for Value Added Tax (VAT) refunds submitted by Emirati citizens for taxes incurred on building new residences. This marks a substantial increase from the 23,340 applications approved by mid-2023, representing a 32.45% growth in approved requests over a 12-month period.

Total value of refunds reaches AED2.54 billion

The total value of approved refunds has reached an impressive AED2.54 billion since the service’s launch. Between June 2023 and June 2024, the FTA approved 7,580 new applications, allowing citizens to reclaim over AED1 billion in taxes paid on new homes. In the first half of 2024 alone, 3,590 new applications were approved, refunding AED336.09 million in taxes.

Year-over-year growth in refund amounts

The FTA’s statistics reveal a remarkable upward trend in both the number and value of approved applications. From 270 requests worth AED9.11 million in 2018, the figures rose to 8,250 applications worth AED720.12 million in 2023. This represents a 15.06% annual growth in approved requests and a 23.44% increase in refunded VAT amounts compared to the previous year.

Factors Driving the Surge in Tax Refunds

Increased tax awareness among UAE citizens

The Federal Tax Authority (FTA) has observed a significant rise in UAE citizens benefiting from the Tax Refund Scheme for Building New Residences. This surge is attributed to heightened tax awareness among Emirati citizens, leading to a 32.45% increase in approved applications compared to the previous year.

Continuous improvements to the refund service

Since its launch six years ago, the FTA has consistently enhanced the tax refund service. These improvements include streamlining the refund process and introducing additional facilities for UAE citizens who meet the legal requirements. The Authority has reduced processing time for the “Tax Refund for UAE Nationals Building New Residences” from 25 to 20 minutes, simplifying the application process by reducing steps and required fields.

Launch of Maskan smart application

The FTA recently launched the Maskan smart application, revolutionizing the VAT refund process for home construction. This digital platform allows Emirati citizens to request refunds on VAT incurred in constructing new homes through 100% paperless procedures. The app expedites the tax refund process, aligning with the UAE’s broader digital transformation initiatives and the Government Services 2.0 framework.

The Federal Tax Authority’s approval of AED2.45 billion in tax refunds for Emirati homebuilders has a significant impact on the UAE’s housing sector. This move shows the government’s commitment to support citizens in building new homes and boost homeownership. The surge in approved applications and refund amounts points to growing awareness among UAE nationals about the housing system and tax regulations.

The launch of the Maskan smart application is causing a revolution in the VAT refund process for home construction. This digital platform, along with other improvements to the refund service, has made it easier for Emirati citizens to claim tax refunds. As the FTA continues to enhance its services and streamline processes, it’s likely that more UAE citizens will benefit from this scheme, further supporting the country’s housing initiatives and digital transformation efforts.