As per the UAE Value Added Tax (VAT) regulations, the input tax incurred on the development of a new commercial property can be recovered in full provided that the supplies of the building are taxable. It means that the developers can recover the Value Added Tax (VAT) over the course of the building’s development. If a taxable person incurs the costs of the development of a residential building, all the VAT incurred on the cost of development can be fully recovered provided the costs relate to the zero-rated first supply.
Any subsequent supplies of the building by that taxable person will be ignored for input tax recovery. In view of these rules, any Value Added Tax (VAT) incurred on the development of a mixed-use development can be fully recovered. Tax agents in Dubai can assist the developers in this regard.
Value Added Tax (VAT) Recovery on Repair & Maintenance Costs
You are allowed to fully recover the input tax incurred on the repair and maintenance costs of a property exclusively used for commercial use. However, the input tax incurred on the repair and maintenance costs of a property exclusively used for residential purposes is not recoverable. However, the input tax incurred on a property used for both commercial and residential use must be directly attributed to the Value Added Tax (VAT) on costs incurred as far as reasonably possible.
