Who pays the VAT when buying commercial property in the UAE?
When commercial property is sold by anyone other than its developer, the buyer pays the 5% VAT directly to the FTA, or through a bank the FTA nominates, before the Land Department completes the transfer. The seller still issues a tax invoice and adjusts its return so the tax is not paid twice.
On this page
Where the special process does not apply
Sales or leases of residential property, leases of commercial property, sales by the developer of the property, and sales of tenanted commercial property that qualify as a transfer of a business to a taxable buyer.
Proof for the Land Department
The buyer receives a payment transaction number from the FTA, or proof of payment from the bank. The transfer cannot proceed without it, and missing it causes delays.
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
An investor sells a warehouse it bought five years ago to a logistics company for AED 12,000,000. The buyer pays AED 600,000 of VAT to the FTA, gets a payment transaction number, and presents it at the Land Department to register the transfer.
Questions people ask
Does this apply to a developer's first sale?
No. Developers account for VAT normally.
Does it apply to residential property?
No.
Does the seller still issue a tax invoice?
Yes, and adjusts its return.