After a period of much debate as to the application of VAT in
the re/insurance industry in the UAE, the UAE Federal Tax Authority
(FTA) has provided some clarification in the form of a VAT guide
for the UAE insurance sector (the Guide) issued on 2 October 2018.
The FTA recognises that transactions in the insurance sector have
been complex to analyse. We have highlighted below a few of the
more pertinent issues addressed in the Guide.
Bundled products
Insurance products may be packaged or 'bundled' together
where they would ordinarily be treated as separate services. The
issue that arises is how to characterise such a supply, where
services are treated to different degrees of taxation; one supply
may be taxed with the standard VAT rate and another with a zero
rate or exemption, such as the provision of add-on insurance
products ('riders') to a life insurance policy.
