Introduction
Dubai always grows fast with real estate investment and new business. Many people buy and sell properties every day. Property owners feel relaxed when property management entities handle their real estate work. These management companies help keep things organized. They take care of everything from rent collection to building maintenance. The government in Dubai makes strict VAT rules for these companies. The Federal Tax Authority (FTA) also explains these rules clearly to help everyone follow the law.
What Laws Govern Property Management Entities in Dubai?
Dubai has Law No. 6 of 2019, which tells everyone how to own and manage real estate together. This law gives property management companies and owners’ associations special rights and responsibilities. The law also explains how VAT affects these groups. The FTA says every company must check if their service is taxable. If it is, they must follow VAT rules. Mubarak Al Ketbi (MAK) Auditing helps you understand your rights under this law.
What Happened to Owners’ Associations and VAT Registration?
Law No. 6 of 2019 changed things for owners’ associations. The law moved all rights and duties of owners’ associations to property management entities. After that, owners’ associations were not making taxable supplies anymore. Any owners’ association that registered for VAT had to cancel their VAT registration before December 2019. This rule also covered properties in Dubai free zones. Now, property management companies handle most VAT matters for joint properties.
What Is a Property Management Entity Under UAE Law?
Property management entities are companies or groups that take care of shared facilities in joint properties. These can be big developers or special management firms hired by the property owners. The management entity looks after everything, including:
- Maintenance of common areas
- Cleaning of buildings
- Security services
- Collecting service charges from owners
They collect money from unit owners to cover costs. In return, they provide many management services. Every property management company must keep records of the services it provides.
Does a Property Management Entity Need VAT Registration?
Yes. The law says property management companies provide taxable services. If their income goes over the VAT registration limit, they must register for VAT. In the UAE, the standard VAT rate is 5%. If your property management company collects service fees above the registration threshold, you must get a VAT number.
Bullet Points: When VAT Registration is Needed
- Company provides taxable management services
- Total taxable supplies go over the registration threshold
- Company must collect and pay 5% VAT on services
What Are the Main VAT Obligations for Property Management Entities?
Every VAT-registered property management entity must:
- Issue valid tax invoices for every service
- Use the correct invoice format under UAE law
- File VAT returns on time with the FTA
- Report all service income correctly in VAT returns
- Claim input VAT for eligible business expenses
If you miss these steps, you could face fines or lose your good standing. Always keep good records and check that your team follows every VAT rule.
Other Important VAT Duties for Property Management Firms
- Keep all receipts and invoices for seven years
- Train your team on VAT laws and updates
- Stay alert for any changes in VAT regulations from FTA
- Review contracts regularly to stay compliant
How Mubarak Al Ketbi (MAK) Auditing Can Help
When it comes to VAT on property management, don’t let the grass grow under your feet! Mubarak Al Ketbi (MAK) Auditing has a team ready to guide you with everything from VAT registration to reporting. Our experts check your records, answer your questions, and help you keep your business running smoothly under UAE law.
For more information
- Visit our office: Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates
- Contact/WhatsApp: +971 50 276 2132
