1. Financial Services – Guidance Note
1.1 Overview
1.1.1 Short brief
VAT was introduced with effect from 1 January 2018 in the UAE. As a general consumption tax on the supply of goods and services, its effects must be understood by providers of financial services in the UAE, in two contexts:
- its application to the activities of all financial services providers; and
- the approach financial services providers in the UAE should take to determine the amount of VAT on costs (i.e. input tax) they are eligible to reclaim where they make both taxable and exempt financial services.
1.1.2 Purpose of this document
This document contains guidance about the characteristics of financial services for VAT purposes.
In addition, this document provides guidance for the financial services industry to understand which of the services and functions it provides are liable to and exempt from VAT and in turn, the extent to which VAT recovery on costs is possible. It explains the concept of input tax apportionment as well. Detail on Special Input Tax Apportionment Methods is provided in a separate Guide – Input Tax Apportionment | VATGIT1.
1.1.3 Who should read this document?
This document should be read by those responsible for tax matters operating in the
financial services industry in the UAE, as well as their tax agents and advisers.
It should be read in conjunction with the Taxable Person Guide for VATG001.
1.2 Status of the document
This guidance is not a legally binding statement, but is intended to provide assistance in understanding and applying the VAT legislation.
Download the complete FINANCIAL SERVICES VAT Guide – VATGFS1 July 2019