1. What is Real Estate?
Real estate is generally considered to be property consisting of land or buildings, and includes:
• Any area of land over which rights or interests or services can be created;
• Any building, structure or engineering work permanently attached to the land;
• Any fixture or equipment which makes up a permanent part of the land or is permanently attached to the building, structure or engineering work.

2. What is a supply of real estate?
For VAT purposes, a supply of real estate is treated as a supply of goods (see Article 2 of VAT Executive Regulations).
As a result, a supply of real estate involves the transfer of ownership of the real estate, or the right to use the real estate, to another person.

3. How is the time of supply ascertained for real estate transaction?
Time of supply for real estate transactions will be ascertained as per nature of supply of transactions as stated below:
a. For one-time payment for sale or lease – earliest of any of the following dates:
1. The date on which property is transferred, or
2. The date on which possession of property is handed over, or
3. The date on which construction of the property is completed, or
4. The date of receipt of Payment, or
5. The date on which Tax Invoice was issued.

b For any contract that includes periodic payments or consecutive invoices - earliest of the following dates:
1. The date of issuance of Tax Invoice, or
2. The date of payment is due as shown on the Tax Invoice, or
3. The date of receipt of payment.
In the event that 12 months has passed from the date of provision of the goods or services and none of the above events has occurred, date of supply will be triggered at the 12-month point.
The certification of a construction project at a particular point in time will not trigger the date of supply for VAT purposes. However, certification of a project is often linked to other obligations such as a due date for payment, which may itself trigger the date of supply.


4. Are real-estate transactions taxable under UAE VAT?
Yes, it is taxable as supply of real-estate is treated as a supply of goods.
However, there are exceptions, and certain supply under real-estate are either zero rated or are considered as exempted supply.

5. What type of real-estate transactions are Exempted?
Following types of real-estate transactions are exempted from UAE VAT:
a. Supply of existing residential property (Further discussed in Q. No. 11)
b. Supply of Bare Land. (Further discussed in Q. No.19 & 20)

6. What type of real-estate transactions are Zero Rated?
Following types of real-estate transaction are zero-rated (0% VAT) from UAE VAT:
a. First Supply of a residential building. (Further Discussed in Q. No. 10)
b. Supply of a new charitable building.
Note: Supply of real estate made within Designated Zone are outside the scope of UAE VAT.

7. What is a Bare Land and is supply of bare land taxable?
“Bare Land” under UAE VAT refers to barren land which does not have either a Completed building, a Partially completed building or any Civil engineering works on top of the land:
The supply of bare land is exempt from VAT. This includes the supply by either lease or by sale. As a result, any VAT on costs associated with the supply of bare land e.g. legal fees or agents’ fees, shall not be recoverable by the supplier.

8. How does a master developer recover Input VAT on infrastructure costs?
Where a master developer incurs VAT during constructing communal infrastructure on a large plot of land, such costs are incurred in the normal course of the master developer’s business. As such, the VAT on such costs should be recoverable as a general overhead cost of the business.
Where the business makes full taxable supplies, the VAT incurred on the infrastructure costs shall therefore be recoverable in full.
However, where the smaller plots of land in the master community are sold as bare land they shall be exempt from VAT, with no right to recover any VAT.
If a mixture of bare land and commercial real estate is sold from the site, then the VAT incurred on infrastructure costs should be apportioned under the normal input tax apportionment rules.

9. How are the retention payments related to construction services taxed?
There are no special rules for determining the date of supply in relation to retention payments, therefore the normal date of supply rules must apply.
If the services are considered to have already been completed by the supplier, the date of supply will be triggered on the date the services were completed (or on the date of issue of the tax invoice or receipt of payment if
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earlier). However, if the services are not contractually treated as completed until such time that the sign off is given by the recipient, then the date of supply will be delayed until the earlier of:
• The time the retention payment has been made;
• The work has been signed off as complete; or
• The tax invoice has been issued.
This means that where the construction services are not considered to be contractually complete, VAT is only due to the extent of any payments received or invoices issued during delivery of the services. The VAT applicable on the retention payment would not be due to be accounted for by the supplier until the time the retention payment is received by the supplier, or an invoice in respect of the retention payment is issued, whichever is earlier.

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