DUBAI 10 December 2017: Banks have begun to advise customers that part of your banking, financial and credit card transactions are likely to come under the upcoming Value Added Tax (VAT).
“You may be aware that the UAE is implementing VAT at the standard rate of 5%, with effect from 1 January 2018. This will apply to most supplies of goods and services supplied from this date,” said a notification from one of the banks.
“VAT will apply to supplies of goods and services… even if the contract for the supply of such goods or services was entered into before that date. This means that even though you have an existing agreement(s) with us, VAT may apply to any product/service we provide to you from 1 January 2018.
“This applies, without limitation, to agreements related to bank accounts products and services, Murabaha Finance, Ijarah Finance, various Islamic credit facilities and Islamic financing products, Wakala Agreements, Credit Cards, treasury services, any Shari’a compliant product and/or any other product and/or service we provide to you from 1 January 2018,” said the bank.
The bank went on to say that “if VAT is chargeable, we will normally debit your account for the VAT amount in the same way and at the same time as we debit your account for the underlying charge, expense or commission”.
The UAE Ministry of Finance published Executive Regulations in respect of VAT on 28th November 2017 which provided clarity with respect to how VAT will apply to financial services and these regulations are available on the MOF Webpage.
Tax Registration number: For customers who are or will be registered for VAT, contact your relationship manager or your nearest branch in order to update your account details with your Tax registration number as soon as it is available.