The UAE’s Federal Tax Authority (FTA) has clarified that all commercial real estate will be subject to the 5% VAT, while residential units will be largely exempt. In a recent statement, the FTA stated that the first supply of a new residential building within the first three years following its construction will be zero-rated. Subsequently, all supplies will be exempt within the first three years. Owners of residential buildings do not need to register for VAT if they have no other business activities and owners of non-residential buildings are required to register if the value of supplies over the course of the preceding 12 months exceeds AED 375,000, or if the value is expected to exceed that figure in the next 30 days. For mixed use buildings, each component will be treated accordingly, and the tax incurred by the owner of the building would need to be apportioned.