Banks operating in the UAE are subject to minimum regulatory capital requirements in accordance with applicable regulations in the UAE, or of a foreign jurisdiction where the relevant laws and regulations are substantially aligned with the Basel III framework. One element of regulatory capital is Additional Tier 1 capital. Instruments that a bank issues to meet certain minimum regulatory capital criteria may be included in Additional Tier 1 capital. These instruments are referred to as "AT1 Instruments" in this public clarification.
The purpose of this Public Clarification is to clarify whether payments made by banks on AT1 Instruments are deductible in determining their Taxable Income.
Where payments made by banks in respect of AT1 Instruments are not included in Accounting Income, the payments are not deductible for the purposes of determining Taxable Income.
The classification and tax treatment of AT1 Instruments by holders are outside the scope of this clarification.
Banks o...