What is the VAT rate for commercial real estate in the UAE?
The VAT rate for commercial real estate, such as offices and shops, is 5% for both sales and leases. This applies to taxable supplies, and owners can recover VAT on related expenses.
Commercial real estate in the UAE is subject to standard VAT treatment:
VAT Rate
- Standard 5% VAT applies to all commercial properties
- Includes offices, shops, warehouses, and industrial buildings
- Applies to both sales and rental transactions
- No exemptions for commercial properties
Sales Transactions
- 5% VAT charged on the sale price
- Seller must issue a tax invoice
- Buyer pays VAT as part of the purchase price
- VAT recoverable if buyer is VAT-registered
Lease Transactions
- 5% VAT on monthly/annual rent
- Landlord charges VAT to tenant
- Tenant can recover VAT if business-registered
- VAT applies to all lease payments
VAT Recovery
- VAT-registered businesses can recover input VAT
- Includes VAT on purchase, maintenance, and improvements
- Must maintain proper documentation
- Recovery through quarterly VAT returns
