1. Insurance – 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 insurance and related services in the UAE, in two contexts:
- its application to the activities of all providers of insurance and related services; and
- the approach providers of insurance and related services 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 services of insurance and related services.
1.1.2 Purpose of this document
This document contains guidance about the characteristics of insurance and related services for VAT purposes.
In addition, this document provides guidance for the insurance industry to understand which of the services and functions they provide are liable to VAT and which are exempt from VAT and in turn, the extent that VAT recovery on costs is possible. It therefore also explains the concept of input tax apportionment.
1.1.3 Who should read this document?
This document should be read by those responsible for tax matters operating in the insurance industry in the UAE, as well as their tax agents and advisers.
It should be read in conjunction with the Taxable Person Guide (VATG001).