Is the sale of bare land exempt from VAT in the UAE?
Yes. The FTA real estate guide says the supply of bare land, by sale or lease, is exempt from VAT. Land counts as bare only if it has no completed buildings, partially completed buildings or civil engineering works on it. Land that fails that test is treated as commercial land and taxed at 5%.
What makes land no longer bare
Any completed building, partly built structure or civil engineering work on the plot removes bare-land status. Natural trees and plants do not. The FTA evaluates borderline plots case by case, so enabling works such as piling or roads can change the VAT on a land sale.
Recovery of costs
Because the supply is exempt, VAT on costs linked to it, such as legal and agent fees, cannot be recovered by the seller.
How SupaJack Construct helps
Project records hold the dates of work starting on a plot, which helps an owner show whether civil engineering works existed at the date of a sale.
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 developer sells an empty plot for AED 5,000,000 with no VAT. A second plot, where piling has been completed, sells for AED 6,000,000. Piling is civil engineering work, so that sale is likely standard-rated and carries AED 300,000 VAT.
Questions people ask
Does a boundary fence stop land being bare?
The FTA assesses borderline cases individually.
Is a lease of bare land exempt?
Yes, sale or lease.
Can the seller recover VAT on agent fees?
No, because the supply is exempt.