Banks have started charging VAT on various services offered, following a June circular from the Central Bank of UAE, which rescinded a previous notice to the contrary.
In December, the Central Bank issued a notice informing banks that they should absorb VAT charges until they received further instructions.
In June last month, an amendment was issued, detailing 43 new caps on fees and commission charged on consumer-related banking services. The circular specified that "all fees set out in this amendment are exclusive of VAT charges."
Tina Hsieh, senior manager for indirect tax at global consultancy PricewaterhouseCoopers, said banks will now revise their fees and commissions, publishing any revisions in their schedule of charges.
“To that end, retail customers, for example, will be paying VAT in addition to the fees or commissions charged by banks,” she added.
The December notice seemed to oppose the understanding of many banks at the time, according to PwC, “where the interpretation is that charging VAT on their (maximum) fees and commissions is not an increase in fee but rather is a levy of tax on behalf of the Federal Tax Authority”.
However, the Central Bank clarified the issue in the circular issued last month, giving banks the go-ahead to charge VAT on fees to individuals and companies.
“The new amendment which is effective as of July 1 includes both individuals and entities. Both will be charged a 5 per cent VAT on all fees and bank services with no exception,” said Abdul Aziz Al Ghurair, chairman of UAE Banks Federation in an interview with Al Bayan Economic.
Charging customers VAT is in line with the practices of banking systems in many developed countries internationally, he said.
The new decree, he added, allowed fee caps on 43 out of 140 bank services to a tax fee increase of a maximum of 5 per cent.
“We believe that the Central Bank’s resolution is clear, will have a positive effect on banks performance and will not adversely affect credit limit in the sector,” said Mr Al Ghurair.
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Read more:
UAE Central Bank caps retail banking fees in boost to expat-friendly economy
Revealed: what the new UAE bank fee changes actually are
Cabinet approves VAT cash back for tourists visiting UAE
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Many banks now declare on their websites that VAT will be charged where applicable.
Some, such as Standard Chartered, include a section explaining the recent circulars to customers, setting out how they plan to implement the charge.
“Standard Chartered Bank will be allowed to charge VAT where applicable, by increasing the existing fee structures for both individual and non-individual clients for an additional amount equal to the underlying payment multiplied by the appropriate rate of tax, effective from 19 June 2018 on a prospective basis in accordance with UAE VAT law,” reads a statement on Standard Chartered's website.
Mohamed Abdel Bary, regional chief finance for Africa & Middle East and chief finance officer for the UAE at Standard Chartered, said the bank is committed to complying with all legislation, rules and other regulatory requirements.
“We actively cooperate with our regulators and share international best practice in order to ensure such compliance,” he added.
A notice on the Citi website said the bank’s understanding is that “bank fees will not be exempt from VAT. All the bank account fees charged by Citi are exclusive of taxes".
A spokeswoman for the bank said: “Citi is in compliance with the Federal Tax Authority VAT regulation and with the CBUAE regulations regarding bank loans and other services offered to individual and non-individual customers.”
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Read more:
VAT q&a: 'Can a UK business visitor reclaim VAT on UAE spending?'
"Do I have to pay tax on UAE income when I return to the UK this summer?"
VAT q&a: 'Do I have to pay VAT twice on an item posted to the UAE?'
VAT q&a: 'What is the best way to make a VAT payment to the Federal Tax Authority?'
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Poland Statement
All people fleeing from Ukraine before the armed conflict are allowed to enter Poland. Our country shelters every person whose life is in danger - regardless of their nationality.
The dominant group of refugees in Poland are citizens of Ukraine, but among the people checked by the Border Guard are also citizens of the USA, Nigeria, India, Georgia and other countries.
All persons admitted to Poland are verified by the Border Guard. In relation to those who are in doubt, e.g. do not have documents, Border Guard officers apply appropriate checking procedures.
No person who has received refuge in Poland will be sent back to a country torn by war.
Electoral College Victory
Trump has so far secured 295 Electoral College votes, according to the Associated Press, exceeding the 270 needed to win. Only Nevada and Arizona remain to be called, and both swing states are leaning Republican. Trump swept all five remaining swing states, North Carolina, Georgia, Pennsylvania, Michigan and Wisconsin, sealing his path to victory and giving him a strong mandate.
Popular Vote Tally
The count is ongoing, but Trump currently leads with nearly 51 per cent of the popular vote to Harris’s 47.6 per cent. Trump has over 72.2 million votes, while Harris trails with approximately 67.4 million.
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Fixtures
Sunday, December 8, Sharjah Cricket Stadium – UAE v USA
Monday, December 9, Sharjah Cricket Stadium – USA v Scotland
Wednesday, December 11, Sharjah Cricket Stadium – UAE v Scotland
Thursday, December 12, ICC Academy, Dubai – UAE v USA
Saturday, December 14, ICC Academy, Dubai – USA v Scotland
Sunday, December 15, ICC Academy, Dubai – UAE v Scotland
Note: All matches start at 10am, admission is free
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COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
Roll%20of%20Honour%2C%20men%E2%80%99s%20domestic%20rugby%20season
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The specs
Engine: 1.5-litre 4-cylinder petrol
Power: 154bhp
Torque: 250Nm
Transmission: 7-speed automatic with 8-speed sports option
Price: From Dh79,600
On sale: Now
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From Zero
Artist: Linkin Park
Label: Warner Records
Number of tracks: 11
Rating: 4/5
The specs
Engine: 2-litre 4-cylinder and 3.6-litre 6-cylinder
Power: 220 and 280 horsepower
Torque: 350 and 360Nm
Transmission: eight-speed automatic
Price: from Dh136,521 VAT and Dh166,464 VAT
On sale: now
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Ticket prices
- Golden circle - Dh995
- Floor Standing - Dh495
- Lower Bowl Platinum - Dh95
- Lower Bowl premium - Dh795
- Lower Bowl Plus - Dh695
- Lower Bowl Standard- Dh595
- Upper Bowl Premium - Dh395
- Upper Bowl standard - Dh295