The Value Added Tax (Amendment) Law of 2016, which took effect on 18 November 2016, amends the Value Added Tax Laws of 2000-2015 with regard to the reduced rate of VAT payable on owner-occupied residential property.
On application to the VAT authorities, a reduced rate of 5 per cent is available in respect of the first 200 square meters covered area of buildings that are to be used as the owner's primary residence for at least 10 years.
Prior to the amendment this reduced rate was available only if the total covered area was no greater than 275 square meters. This overall limit has now been removed and the reduced rate is available on the first 200 square meters of covered area of all qualifying residential property, irrespective of size, with the excess over 200 square meters being subject to VAT at the standard rate.
The amendment also includes provisions allowing persons who have already benefitted from the reduced rate to re-apply and acquire a new residence on which the reduced VAT rate will be imposed, irrespective of whether the 10-year occupation threshold has been passed.
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