Chetan Suri

<p>Real-estate is one of the sectors which impacts all expatriates and citizens in UAE in the form of house rents and prices. Everybody know that 5% VAT will be charged on sale of Commercial Property<strong>. <span style="color:#000080">So, what&rsquo;s new in this alert! </span></strong></p> <p><span style="color:#000080"><strong>The federal Tax Authority(&ldquo;Authority&rdquo;) has introduced a separate mechanism for VAT payment on Commercial properties. This process will be completed as a miscellaneous payment under payment for commercial property sale on e-Services portal. </strong></span></p> <p><span style="color:#000080"><strong><u>Who shall be affected:</u></strong></span></p> <p>Persons who are buying a commercial property which is subject to VAT (&ldquo;buyers&rdquo;) in the UAE shall have to complete their VAT payment on the FTA&rsquo;s eServices portal.</p> <p><span style="color:#000080"><strong><u>Non- Applicability</u></strong>:</span></p> <p>No worries for the certain buyers as this mechanism <strong>shall only apply</strong> to sale of commercial property which are subject to VAT at 5%. Therefore, it shall&nbsp;not apply to:</p> <p>&middot; any sales or leases of residential property;</p> <p>&middot; leases of commercial property; and</p> <p>&middot; the sale of a commercial property with the benefit of sitting tenants to a buyer who is a Taxable Person which qualifies as the transfer of a business.</p> <p>&nbsp;</p> <p><span style="color:#000080"><strong><u>What Buyer need to follow:</u></strong></span></p> <p>The Authority has set up a very simple two steps process for payment of VAT under this mechanism. Steps are:</p> <ol> <li>A buyer will first have to create an e-Services account.</li> <li>After this, he has to login to e-Service portal and go to &lsquo;my payments tab&rsquo;. Under miscellaneous payment, select Commercial property sale and fill up the mandatory fields &amp; make payment.</li> </ol> <p>&nbsp;</p> <p><span style="color:#000080"><strong><u>Take away:</u></strong></span></p> <ol> <li>Buyer must complete his VAT payment before he starts with the ownership transfer process with the Land Department.</li> <li>The Seller will provide buyer with an invoice that includes the VAT amount and TRN. Buyer must keep a copy of the invoice.</li> <li>Buyer shall have to keep the Payment Transaction Number with him once he goes to the Land Department to continue processing the ownership transfer process. Without the Payment Transaction Number, the purchase of the property cannot proceed, and it will lead to delays.</li> </ol> <p>&nbsp;</p> <p><span style="color:#000080"><strong>Thus, we can conclude that, under this mechanism the burden to pay VAT has neither increased nor decreased, Just the responsibility to deposit the VAT to Authority has now on buyer of the commercial property.</strong></span></p> <p>&nbsp;</p>


VAT Service