The introduction of the value-added tax (VAT) in the UAE from next month (and the next year) will be the main incentive for institutional investors to enter the real estate market in Dubai.
Leading experts in the real estate market of the emirate believe that a new level of transparency in real estate transactions caused by the introduction of VAT will become a vital incentive to bring larger number of real estate investors to Dubai, including trusts, companies and organizations.
Value-added tax (VAT) will be introduced in Dubai since 2018, in order to bring the region's economy in line with world standards. VAT in the UAE is expected to be one of the world’s lowest, or, more specifically, almost tokenistic — about 3-5%, while in other countries this tax can reach up to 20% of the goods/service value.
VAT will hardly have any effect on residential real estate sector in any way. When buying a primary off-plan home, you won’t have to pay VAT to the developer. The secondary real estate sector will also be exempt from VAT on sale. As a result, according to experts, Dubai real estate market will receive a more open and transparent system for investment.
Institutional investors from Geneva, London and other major financial centers of Europe believe that the VAT will have a positive impact on the Dubai investment climate, due to increased transparency related to the VAT purposes audit and the requirement to provide open data for all sectors of the economy.
According to DLD, 217 nationalities invested in Dubai real estate a total of AED151 billion just in the first half of 2017. Data on the year’s second half investments will be available later, but now experts predict a new a surge of activity from sovereign wealth funds, regional asset managers, pension and insurance companies for the first months of 2018.
Earlier on imexre.com we’ve already disclosed all the intricacies of the VAT introduction in Dubai. More details and possible consequences for Dubai real estate sellers, and buyers, and tenants, and landlords can be found in
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