The information contained in this communication is for general information purposes only and does not constitute a legal advice.
We would like to inform you that Value Added Tax (VAT) - which is an indirect tax - will be introduced across United Arab Emirates (UAE) and Kingdom of Saudi Arabia (KSA) on 1 January 2018 at a standard rate of 5%.
This means our local members (AXA and MetLife) in the countries will be required to comply with the VAT laws and regulations.
There are good indications that VAT will be applicable to most industries including Insurance Companies. Our current understanding of the law is that it is likely that premium of Group Medical policies will be subject to VAT and premium related to Life policies will be VAT exempt, including Permanent and total disability, long term disability, accidental death and critical illness.
Our local members are working closely with intermediaries and customers to facilitate the implementation of this tax and understanding of this transition. This 5% tax will be collected by the insurers and passed into the relevant Tax Authorities. If your offices are located outside the UAE or KSA, no VAT will be chargeable on a cross border business.
In the other GCC* countries (Bahrain, Kuwait, Oman and Qatar) our understanding is that the VAT will be implemented starting from 1 January 2019. If your company’s head office is located outside the UAE or KSA but it has a sub-office in the UAE or KSA, VAT will be chargeable on the portion which relates to the sub-office in the UAE.
For more information, please visit the official website https://www.tax.gov.ae/index.aspx
The MAXIS GBN team
*Gulf Cooperation Council