The UAE Federal Tax Authority (FTA) has issued updated VAT guidance for supplies of real estate. The guidance covers the VAT treatment of supplies of real estate and various common transactions that occur within the real estate sector. With respect to different supplies, the guidance includes the following VAT treatment:

• The first supply of a residential building within three years of the building's completion date - VAT zero-rated;
• The supply of a residential building other than a qualifying first supply - VAT exempt;
• The first supply of a charitable building - VAT zero-rated;
• The supply of a charitable building other than a qualifying first supply - Standard 5% VAT rate;
• The supply of bare land not covered by either completed buildings, partially completed buildings, or civil engineering works - VAT exempt;
• The supply of land that is not bare - Standard 5% VAT rate;
• The supply of commercial real estate (not residential or charitable) - Standard 5% VAT rate;
• The supply of real estate within a Designate Zone - outside the scope of VAT
• The supply of construction services, regardless of the type of building being constructed - Standard 5% VAT rate.

In general, where a supply is subject to the standard 5% rate or zero-rated, input VAT is recoverable in full, and where a supply is exempt, input VAT is not recoverable.

In addition to the above supply types, the guidance also covers VAT matters in relation to mixed-use developments, owners associations, development infrastructure, supplies between landlords and tenants, and others.