The Federal Tax Authority has broadened the range of construction-related expenses eligible for VAT refunds for UAE nationals constructing new residences, with the initiative expected to generate around AED 200 million in VAT savings and increase approved refund claims to more than AED 1 billion in 2026.
The UAE’s Federal Tax Authority (FTA) has launched a new initiative expanding the scope of expenses eligible for VAT refunds for UAE nationals constructing new residences, allowing citizens to claim refunds on an additional range of construction costs.
The initiative aligns with the UAE leadership’s directives and coincides with the Year of Family, with the aim of supporting family growth and cohesion.
According to the FTA, expanding the scope of eligible expenses is expected to generate an estimated AED 200 million in VAT savings for UAE nationals, with average savings of approximately AED 25,000 per claim. The authority said the measure is intended to support home ownership and reduce financial pressures on families.
The initiative is also expected to increase the value of approved refund claims. Based on projected claims demand for 2026, the total value of approved refund claims is expected to exceed AED 1 billion, compared with approximately AED 754 million in 2025.
The FTA said its efforts in the coming period will focus on raising awareness among UAE citizens about the initiative and how to benefit from it. The authority plans to hold discussion sessions with citizens across the UAE at local district councils to present the new initiative and other citizen-focused services, while also gathering feedback, observations and suggestions to support further service development.
The authority stated that the initiative is already active and applies to all VAT refund claims for Emirati home construction submitted on or after 1 January 2026, provided all eligibility requirements are met. It added that the digital VAT refund platform has been updated to include the categories of eligible expenses approved under the initiative.
HE Abdulaziz Al Mulla, Director General of the FTA, stated: “FTA’s latest tax relief for UAE nationals aligns with the UAE leadership’s vision to extend comprehensive support to citizens and deliver premium services that ensure their happiness. The initiative reflects integrated national efforts to foster social stability and wellbeing.”
He added: “Coinciding with the Year of Family, this new initiative ensures the wellbeing of our citizens by establishing clear and transparent mechanisms to facilitate VAT refunds for new home construction.”
Al Mulla explained that, under the initiative, UAE citizens may claim VAT refunds on specified expenditures related to the construction of new residences. Eligible items must form part of the residence, including fixtures and fittings, and must be intended for the private use of the citizen or their immediate family. Refunds remain subject to all applicable conditions, procedures and documentation requirements.
The newly eligible items include staff quarters for watchmen, drivers and domestic workers; home gyms and game rooms; integrated security and smart home systems together with their built-in components; electronic or smart doors for the main residence and garage; swimming pools; fountains; decorative indoor water features; landscaping; and complete home reconstruction projects, including demolition and rebuilding costs.
The FTA said that, to qualify for a refund, these features must form an integral part of the new residential property, be constructed on the same plot of land and directly serve the primary residence.
This announcement was made on 9 June 2026.
