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Will UAE banks increase their fees due to VAT?

Will UAE banks increase their fees due to VAT?

 

The UAE will levy five per cent VAT from January 1, 2018, on a host of goods and services

The UAE Central Bank has asked local banks not to increase the existing fees for customers due to upcoming Value-Added Tax (VAT).

“Banks and finance companies will not be permitted to exceed the fees structure for individual customers because of VAT,” reads the notice sent by the apex bank to local banks in the UAE on Thursday.

It also asked the banks not to increase their existing fees structure and levels for non-individual customers because of VAT.

As part of the GCC framework agreed among the regional bloc, the UAE will levy five per cent VAT from January 1, 2018, on a host of goods and services. Saudi Arabia will also join the UAE in implementing VAT. Other regional countries will implement VAT at a later stage.

Mayank Sawhney, director, MaxGrowth Consulting, earlier told Khaleej Times that Processing Fee, File Opening Fee, Assessment Fee, Evaluation Fee, Account Management Fee etc. charged by the banks will be subject to 5 percent VAT in the UAE.

In case of credit cards, fees such as Annual Credit Card Fee, Late Payment Fee, Processing Fee for transferring outstanding payment from one credit card to another etc. will attract five per cent VAT, Sawhney adds.

The UAE Central Bank told banks and financial companies that they will absorb the applicable VAT until further instructions from the apex bank.

Moreover, any applicable VAT on the services provided by the Central Bank will be absorbed by the Central Bank, said the notification.

 

Source: Khaleej Times

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