On 9 June 2026 the Federal Tax Authority (FTA) widened the New Residence VAT Refund Scheme, the mechanism under which a UAE national who builds a private home can reclaim the 5% VAT paid on construction. The expansion brings recreational and lifestyle features — swimming pools, water features, landscaping, smart-home systems and staff accommodation — plus full demolition-and-rebuild projects within the list of eligible expenses, and it applies to every refund claim submitted on or after 1 January 2026. The change operates within the existing framework of Article 75 of the VAT Law and Article 66 of the VAT Executive Regulation; it does not create a new refund right but enlarges what counts toward one.
Who should read this
UAE nationals who are building, or have recently completed, a private residence — and their contractors, tax advisers and accountants. Anyone who filed a new-residence refund claim earlier in 2026 should re-check it against the expanded list, since the wider scope is backdated to 1 January 2026.
Directly affected
Key facts
- Instrument: FTA announcement of 9 June 2026 expanding the New Residence VAT Refund Scheme, reflected in the updated FTA guide VATGRH1 and the FTA's digital refund platform.
- Legal basis: Article 75 of Federal Decree-Law No. 8 of 2017 on Value Added Tax and Article 66 of the VAT Executive Regulation (Cabinet Decision No. 52 of 2017, as amended). The June 2026 change is an administrative expansion of eligible expenses, not a new statute.
- Effective / backdated: applies to refund claims submitted on or after 1 January 2026 — a claim already filed earlier in 2026 falls within the expanded scope.
- Newly eligible: swimming pools, fountains and decorative water features, external landscaping works, smart-home and building-automation systems, and dedicated accommodation for household support staff.
- Also covered: full demolition-and-rebuild projects, including demolition costs, where a national reconstructs a residence on owned land.
- Still excluded: furniture and standalone electrical appliances, and anything relating to a residence used for a business purpose.
- Scale: the FTA estimates roughly AED 200 million in total VAT relief, averaging about AED 25,000 per claim.
- Deadline: claims must be lodged within 12 months of the certified completion of the residence (Article 66(3) of the VAT Executive Regulation).
Executive summary
The New Residence VAT Refund Scheme lets a UAE national who owns land in the UAE and builds a private (non-business) home recover the VAT charged on qualifying construction costs. The right itself sits in Article 75 of the VAT Law, with the conditions and mechanics in Article 66 of the VAT Executive Regulation. What changed on 9 June 2026 is not the right but its reach: the FTA broadened the categories of expenditure it treats as forming part of the residence, folding in recreational and lifestyle elements that its earlier April 2026 VATGRH1 guide had listed as excluded. Because the expansion is backdated to claims submitted from 1 January 2026, it benefits homeowners who have recently claimed as well as those about to.
What changed
The April 2026 iteration of the VATGRH1 guide drew a relatively narrow line around what counts as part of a residence, keeping features such as swimming pools and landscaping on the excluded list. The June 2026 announcement reverses that position. Recreational and lifestyle features that modern villas routinely incorporate are now recognised as part of the qualifying build:
- Swimming pools, fountains and decorative water features — previously excluded, now eligible.
- External landscaping and hardscaping works — garden, paving and site works forming part of the completed residence.
- Smart-home and building-automation systems — integrated lighting, climate, security and control systems embedded in the structure.
- Dedicated accommodation for household support staff — recognised as part of the residence rather than a separate, non-qualifying structure.
- Complete demolition-and-rebuild projects — including demolition costs where a national reconstructs a home on land already owned.
The perimeter of the scheme is otherwise unchanged. Furniture, free-standing electrical appliances and anything tied to a business use of the property remain outside it, and the general rule that services of contractors, architects and engineers, together with building materials incorporated into the residence, are recoverable continues to apply. The FTA has updated its digital refund platform to list the approved categories; where the platform, the VATGRH1 guide and the enacted Arabic text differ, the Arabic text prevails.
Practical implications
For a homeowner mid-project, the expansion can materially increase the recoverable amount — the FTA's own figure of roughly AED 25,000 per claim reflects the value of the added categories. The backdating is the point most likely to be missed: a national who filed a refund claim in the first months of 2026 under the narrower April guidance may have written off pool, landscaping or smart-system VAT that is now recoverable, and should assess whether the claim can be revisited or supplemented rather than treating it as closed.
Documentation discipline decides these claims. The refund turns on tax invoices that are valid under the VAT Law, on evidence that the spend was incorporated into the residence, and on a certified completion date that fixes the 12-month filing window. Contractors' invoices should separate qualifying works from any excluded items (loose furniture, appliances) so the eligible base is clear on its face. Because the scheme is confined to UAE nationals building a genuinely private home, any element of business or mixed use — a rented annexe, for instance — should be identified early, as it can jeopardise the whole claim rather than just that line item.
Action points
- Map your construction cost schedule against the expanded eligibility list, separating qualifying works from furniture and appliances.
- If you filed a new-residence refund claim earlier in 2026, review it for pool, landscaping, smart-system or demolition VAT that can now be recovered and take advice on revisiting it.
- Collect compliant tax invoices and proof that each item was incorporated into the residence; keep contractor, architect and engineer invoices itemised.
- Confirm the certified completion date and diarise the 12-month deadline for lodging the claim through the FTA platform.
- Flag any business or mixed use of the property before filing, and take advice where eligibility is uncertain.
Directly affected: UAE nationals building private homes; construction contractors and consultants preparing supporting invoices; and tax advisers and accountants handling refund submissions.
Enforcement and transitional relevance
The FTA can reject or claw back refunds where invoices are non-compliant, where spend is not shown to form part of the residence, or where the home is put to a business use — so a wider eligibility list raises, rather than lowers, the importance of documentation. The backdated 1 January 2026 start date is the key transitional feature: it opens a window to correct or supplement earlier 2026 claims made under the narrower April guidance, but that window still closes 12 months after the residence's certified completion.
Sources and authorities
Federal Tax Authority — News & VATGRH1 guide
FTA announcement of 9 June 2026 expanding eligible expenses under the New Residence VAT Refund Scheme, administering Article 75 of Federal Decree-Law No. 8 of 2017 (VAT Law) and Article 66 of the VAT Executive Regulation (Cabinet Decision No. 52 of 2017, as amended). This is an administrative expansion of eligible expenses; it does not repeal or amend the underlying legislation.
https://tax.gov.ae/en/media.centre/news/
Original-source date: 9 June 2026 · Captured: 2026-06-20T08:00Z
Instrument details
Measure: FTA announcement of 9 June 2026 expanding the categories of expenditure eligible under the New Residence VAT Refund Scheme, reflected in the updated FTA guide VATGRH1 and on the FTA's digital refund platform.
Underlying legislation: Article 75 of Federal Decree-Law No. 8 of 2017 on Value Added Tax (right to a special refund for UAE nationals building a home) and Article 66 of the VAT Executive Regulation, Cabinet Decision No. 52 of 2017, as amended (conditions, eligible expenses and the 12-month filing window).
Nature of the change: an administrative expansion of eligible expenses, backdated to refund claims submitted on or after 1 January 2026. It does not repeal or amend the VAT Law or the Executive Regulation.
Newly eligible: swimming pools; fountains and decorative water features; external landscaping; smart-home and building-automation systems; staff accommodation; and full demolition-and-rebuild projects. Furniture and standalone appliances remain excluded. The enacted Arabic text and the FTA guide prevail over this summary.
Based on the FTA's 9 June 2026 announcement and guide VATGRH1, and cross-checked against leading practitioner analyses. General information only — it does not constitute legal advice, and the enacted Arabic text prevails. For advice on a specific matter, please contact us. Last updated: 2 July 2026.