Insurance and UAE VAT

[Abdelhamid_Co_CPA_AuditorA]

VAT on insurance and related services supplied in the UAE should be charged except on two specific types of insurance which are defined by way of exception in the Federal Decree-Law No. (8) of 2017 on Value Added Tax, hereafter ‘the Law’ and Cabinet Decision No. (52) of 2017,  hereafter ‘the Executive Regulations’ of Federal Decree-Law No.(8) of 2017 on Value Added Tax, are as follows;

· life insurance and associated reinsurance (exempt), Article 42(3)(c), Executive Regulations.

· insurance relating to the international transport of goods and passengers (zero rated), Article 33(2)(c), Executive Regulations.

A life insurance is a contract which lawfully entered into the extent that it places a sum or sums at risk upon the contingency of the termination or continuance of human life, marriage, similar relationships permitted under applicable law, or the birth of a child. Article 42(1)(c), Executive Regulations.

Whereas the contract of insurance which is provided in connection with the international transportation of goods or passengers, including a transfer which begins or ends in the UAE or which passes through the UAE. International transportation is further defined as:

·       transportation of goods or passengers that begins in the UAE and ends outside the UAE;  Article 33(1)(a), Executive Regulations, or

·       transportation of goods or passengers that begins outside the UAE and ends in the UAE; Article 33(1)(b), Executive Regulations, or

·      transportation of passengers from a place in the UAE to another place in the UAE by sea or air or land as part of an international transport of those passengers if either the first place of departure, or the final place of destination, is outside the UAE; Article 33(1)(c), Executive Regulations.

·    transportation of goods from a place in the UAE to another place in the UAE if the services are supplied as part, or for the purpose, of an international transportation of goods either from a place in the UAE to a place outside the UAE, or from a place outside the UAE to a place in the UAE, Article 33(1)(d), Executive Regulations,.

Type of Insurance	Standard Rated	Zero Rated	Exempt
General Insurance	If the recipient is resident in the UAE	If the recipient is resident outside the GCC Implementing States, is located outside the UAE and the performance of the insurance services is not received by anyone in the UAE who would not be able to recover VAT incurred
Life Insurance		If the recipient is resident outside the GCC Implementing States, is located outside the UAE and the performance of the insurance services is not received by anyone in the UAE who would not be able to recover VAT incurred	If recipient is resident in UAE
International Transport		If in respect of international transportation services only, but not for travel insurance
Travel	If the recipient is resident in the UAE	If the recipient is resident outside the GCC Implementing states, is located outside the UAE and the performance of the insurance services is not received by anyone in the UAE who would not be able to recover VAT incurred
Other	If the recipient is resident in the UAE	if the recipient is resident outside the GCC Implementing states, is located outside the UAE and the performance of the insurance services is not received by anyone in the UAE who would not be able to recover VAT incurred

 

VAT incurred on cost of wholly attributable taxable supplies can be recoverable. VAT incurred on costs which is partly attributable to taxable supplies and also to exempt supplies of financial services must be apportioned, only that part which is reasonably attributable to the taxable supply can be recovered.

 

Reference: UAE VAT Guide - Insurance.

تم تعديل 8 سبتمبر 2019 بواسطة Abdelhamid_Co_CPA_AuditorA