Is VAT charged on commercial property in the UAE?
Yes, at 5%. The FTA real estate guide treats any land or building that is not residential, charitable or bare land as commercial, and taxes its sale or lease at the standard rate on the total consideration. Where payment is by instalment, VAT is due on each instalment, and VAT on related costs can be recovered in full.
On this page
What counts as commercial
Offices, retail, warehouses, hotels, serviced apartments with extra services, and land covered by buildings or civil engineering works. Anything outside the residential, charitable and bare-land definitions is commercial.
Why it matters to contractors
A developer of a commercial building recovers all the VAT a contractor charges it, so VAT on certificates is a cash-flow item for the client rather than a cost.
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 developer sells an office floor for AED 8,000,000 in four instalments of AED 2,000,000. It charges AED 100,000 of VAT on each instalment as it falls due, AED 400,000 in total.
Questions people ask
Is a commercial lease taxed?
Yes, at 5%.
Is VAT due on each instalment?
Yes.
Is a hotel commercial for VAT?
Yes. Hotels are excluded from the residential definition.