Please be informed that this Public Clarification replaces Public Clarification No. VATP036 of 2024.
UAE Banks and exchange houses (collectively referred to as "Financial Institutions") incur international bank charges from banks outside the UAE as a result of using the Society for Worldwide Interbank Financial Telecommunications ("SWIFT") communication system with these banks.
In practice, such international bank charges, and their underlying transactions, are evidenced by "Swift Messages" which do not meet all the requirements to constitute Tax Invoices for UAE VAT purposes.
Financial Institutions may only recover VAT accounted for under the reverse charge mechanism in respect of Services received from banks outside the UAE to the extent such costs are incurred to make Taxable Supplies, provided that the Financial Institutions obtain, and retain the required supporting documents.
This Public Clarification clarifies the Federal Tax Authority's ("FTA") position on two distinct matters, i.e. the requirement to issue Tax Invoices in respect of SWIFT Messages, and the documentary requirements for Input Tax recovery...