Answer:
A company may be entitled to recover the VAT paid during construction if the following conditions are met:
1. The company is registered for VAT and submits tax returns;
2. The constructed property will be used for taxable activities, such as leasing space to other companies;
3. Proper documentation is available:
a. Valid tax invoices for the incurred expenses;
b. Proof of payment for these expenses (even partial payment);
c. Tax invoices must comply with the UAE e-invoicing system requirements (if applicable);
4. The VAT refund claim must be submitted in the same or the following tax period after the above conditions are met.
If part of the building is used for VAT-exempt activities (such as long-term residential leasing), the VAT recovery will only be allowed proportionally.
Legal basis:
- Article 54 and Article 55 of the Federal Decree-Law No. 8 of 2017 on Value Added Tax (VAT);
- Article 52 of Cabinet Decision No. 52 of 2017 on the Executive Regulation of Federal Decree-Law No. 8 of 2017 on VAT.