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VAT implementation
UAE
Important information; please keep a
copy for your records

23/11/2017

Prepared by:
Al Futtaim Willis | Willis Towers Watson

11 01 ( 7002 6
Registered under UAE Federal Law No. 6 of 2007 (Registration No.10 and 11)
Registered office : Unit 303A, 3rd Floor, Sama Tower, Sheikh Zayed Road, Dubai, UAE, Tel: +971 4 3760200, Fax: +971 4 3760300
Branch Office : (CN-1176335) P.O. Box 45210, 5th Floor, Aldar HQ, Al Raha Beach, Abu Dhabi, UAE, Tel: + 971 2 8137901, Fax: +971 2 5577321
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Important information VAT implementation

UAE
Dear Valued Client,

The UAE Government has announced the introduction of Value Added Tax (VAT) effective from 01 January,
2018. We want to take this opportunity to update you on some of the key changes that will come into
effect once the VAT law is in force.

This document should help you to address any queries that you may have in respect of the applicability of
VAT on the Insurance industry. Our responses are based on our understanding of the VAT law and the first
draft of the Executive Regulations, as per the date of this letter.

A copy of our VAT Registration certificate is enclosed for your records.

It is our commitment to continue to deliver excellent service to our valued clients and to ensure that the
introduction of VAT has the least possible impact on our business relationship.

A copy of your VAT Registration certificate needs to be provided to AFW as soon as possible.

Yours faithfully,

M. Rajendran

Chief Executive Officer

Al Futtaim Willis Co. LLC.

11 01 ( 7002 6
Registered under UAE Federal Law No. 6 of 2007 (Registration No.10 and 11)
Registered office : Unit 303A, 3rd Floor, Sama Tower, Sheikh Zayed Road, Dubai, UAE, Tel: +971 4 3760200, Fax: +971 4 3760300
Branch Office : (CN-1176335) P.O. Box 45210, 5th Floor, Aldar HQ, Al Raha Beach, Abu Dhabi, UAE, Tel: + 971 2 8137901, Fax: +971 2 5577321
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Introduction

11 01 ( 7002 6
Registered under UAE Federal Law No. 6 of 2007 (Registration No.10 and 11)
Registered office : Unit 303A, 3rd Floor, Sama Tower, Sheikh Zayed Road, Dubai, UAE, Tel: +971 4 3760200, Fax: +971 4 3760300
Branch Office : (CN-1176335) P.O. Box 45210, 5th Floor, Aldar HQ, Al Raha Beach, Abu Dhabi, UAE, Tel: + 971 2 8137901, Fax: +971 2 5577321
 |

VAT is an indirect tax and will be applicable across the UAE from 01 January 2018 at a standard rate of 5%.

1. Registration for VAT

All companies with total value of annual supplies exceeding AED 375,000 is required to mandatorily
register with the Federal Tax Authority for VAT.
We encourage you to register with the FTA for VAT if your organization is required to do so.
A copy of your VAT Registration certificate needs to be provided to AFW as soon as possible.

2. Is VAT applicable on Insurance Premiums?

Yes, All Insurance policies with the exception of Life Insurance policies are subject to VAT at the standard
rate of 5%.
However, businesses will be able to recover this additional VAT cost as an Input Credit, subject to holding a
valid Tax Invoice from their supplier.

3. Who will I pay VAT on the Insurance Premiums to?

For all Direct Billed policies (E.g.: Medical, Life, Marine, Cargo, Hull, Energy etc.)
You will receive a VAT compliant Tax Invoice directly from the Insurer and you will make payments
inclusive of VAT to the Insurers bank account.
For all other policies
AFW will send a Non-VAT payment request along with a VAT Compliant Tax Invoice from the Insurer to
you.
You will pay the VAT inclusive Premium amount to AFW who will in turn pay the Insurer.

4. Is VAT applicable on Fees payable to any Consulting or other advisory services I receive from AFW?
Yes, all services provided by AFW will be subject to VAT.
AFW will provide you with a Tax Compliant Fee Invoice which will meet the requirements of the UAE VAT
Law. This Tax Invoice will enable you to recover the VAT charged as an Input Credit from your overall VAT
payment to the authorities.

5. Is VAT applicable on Insurance policies purchased in 2017 with the expiry date falling into 2018?
VAT will be applicable on the portion of premiums falling into 2018 on a pro-rata basis. The Insurer
reserves the right to raise an additional invoice for the VAT due on the portion of such premiums, even
though payment has been made in full earlier.

6. Are Claim payments made by Insurance Companies subject to VAT?

No. VAT is not applicable on any claim payments made by an Insurer.

Note:

This paper is prepared based on our understanding of the UAE VAT law read with the First draft of the
Executive Regulations. We would recommend that you seek independent VAT advice on how your business
will be impacted.

11 01 ( 7002 6
Registered under UAE Federal Law No. 6 of 2007 (Registration No.10 and 11)
Registered office : Unit 303A, 3rd Floor, Sama Tower, Sheikh Zayed Road, Dubai, UAE, Tel: +971 4 3760200, Fax: +971 4 3760300
Branch Office : (CN-1176335) P.O. Box 45210, 5th Floor, Aldar HQ, Al Raha Beach, Abu Dhabi, UAE, Tel: + 971 2 8137901, Fax: +971 2 5577321
 |

11 01 ( 7002 6
Registered under UAE Federal Law No. 6 of 2007 (Registration No.10 and 11)
Registered office : Unit 303A, 3rd Floor, Sama Tower, Sheikh Zayed Road, Dubai, UAE, Tel: +971 4 3760200, Fax: +971 4 3760300
Branch Office : (CN-1176335) P.O. Box 45210, 5th Floor, Aldar HQ, Al Raha Beach, Abu Dhabi, UAE, Tel: + 971 2 8137901, Fax: +971 2 5577321
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Policy wording review

11 01 ( 7002 6
Registered under UAE Federal Law No. 6 of 2007 (Registration No.10 and 11)
Registered office : Unit 303A, 3rd Floor, Sama Tower, Sheikh Zayed Road, Dubai, UAE, Tel: +971 4 3760200, Fax: +971 4 3760300
Branch Office : (CN-1176335) P.O. Box 45210, 5th Floor, Aldar HQ, Al Raha Beach, Abu Dhabi, UAE, Tel: + 971 2 8137901, Fax: +971 2 5577321