The impact of Public Clarification no. VATP001 on the Banking industry
With the release of Public Clarification no. VATP001 on the Value Added Tax (VAT) treatment of compensation-type payments (the clarification), the Federal Tax Authority (FTA) of the United Arab Emirates (UAE) has sparked a discussion within the banking industry on the clarification’s applicability to similar penalty-type fees charged by the banks to their customers.
Deloitte has prepared a thought piece on the applicability and the impact of the Public Clarification to the banking industry, where payments resembling compensation payments are a common occurrence.