Can a master developer recover VAT on roads and utilities in the UAE?
Yes, as a general business overhead. The FTA real estate guide says VAT on communal infrastructure such as roads, power and water is recoverable in full where the master developer's supplies are taxable, not recoverable where plots are sold as exempt bare land, and apportioned where it sells a mix of bare land and commercial real estate.
On this page
Bare land and infrastructure
Infrastructure in communal areas up to the edge of a plot does not stop the plot being bare land. Pipes or connections on the plot itself that break the surface do.
For infrastructure contractors
Contractors building roads and utilities charge 5% on their services. The master developer's recovery depends on how it sells the plots, which can affect its cash flow and payment terms.
How SupaJack Construct helps
Supplier bills in SupaJack Construct record the VAT charged with the supplier's TRN, and projects keep their own costs, so the input VAT on each development can be identified for recovery or apportionment.
Related tools and guides
See the VAT guide for contractors, the VAT calculator, the payment certificate calculator, the retention calculator, finance and VAT in SupaJack Construct, the answer on whether a payment certificate triggers VAT and the meaning of e-invoicing.
Worked example
A master developer spends AED 20,000,000 plus AED 1,000,000 of VAT on roads and utilities. It sells half the plots as bare land and half as serviced commercial plots. The VAT is apportioned, and it recovers about half.
Questions people ask
Is infrastructure VAT recoverable?
Depending on how the plots are sold.
Do communal utilities stop a plot being bare land?
Not if they stop at the plot's edge.
Is apportionment needed for mixed sales?
Yes.