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It is important for Businesses engaging in real estate industry to know the implications of VAT introduction to their business activities so they could maximize their recoverable VAT and manage costs of compliance.

Here are some of the FAQs related to Real Estate Industry:

 

Who are classified as Real Estate?

Real estate industry is engaging with the buying, producing and selling of real estate properties such as land as well as any physical or improvements affixed to the land, including houses, buildings, landscaping, fencing, wells, and the likes.

At TaxWorx, we have assessed all these factors to provide a total solution from invoice, transactional VAT treatment to real time VAT reporting to manage your VAT compliance to the FTA requirements. 

Import

As a VAT registered business, you are responsible to pay for the VAT (Input tax) from your imported Goods and Services, but you can redeem it in full through reverse charge.

Export

VAT (Output tax) is Zero rated when you exported your Goods and Services outside the UAE. However, if the bill to address for your exported services is a UAE VAT registered business, you may charge 5% VAT.

Domestic

VAT is applicable when purchasing and selling taxable goods and services with their respective rates. However, if you construct residential properties, both goods and services supplied for the first 3 years after the completion will be Zero rated, this will help you recover from VAT.

Exemption

If you purchased VAT exempt Goods and Services, VAT (Output tax) is not applicable.

Partial Exemption

If you purchased supplies for your business operations FTA will provide a fair computation for partial exemption; and purchases for your business expenses can be redeemed in full.

 

Implications

As a Business dealing withdifferent VAT treatment on its supplies based on its purpose (Commercial and Private), in addition to a volume of AR & AP transactions, automation and digitisation will significantly help timely and accurate reporting with increased control on cost of compliance. Ensuring you have correctly structured invoices, manage the treatment of transactions correctly, document management & archiving and reporting model will help simplify these challenges reduce risks of noncompliance.

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