Most residential properties will be exempt from taxation when VAT laws come into effect, according to newly announced guidelines.
Released by the Federal Tax Authority, the framework details how the real estate sector will be affected by the five percent levy, set to be implemented in January.
Renting or selling a residential unit within a building will be zero-rated for tax, while commercial units, including shops, businesses, offices and warehouses, will be subject to the new laws and accrue the basic rate of five percent.
Under the new law, dwellings such as serviced apartments, hotels and bed and breakfast will not be included under the tax-exempt status.
In addition, commercial property buyers will be able to reclaim VAT on expenses relating to the supply of the building, whereas residential buyers will not.