- UAE FTA issued VATP041 on April 11, 2025, regarding VAT for SWIFT messages.
- Replaces previous guidance VATP036, affecting financial institutions in the UAE.
- SWIFT is crucial for secure interbank communication.
- Charges for SWIFT services from foreign entities are now under VAT as Concerned Services.
- VATP041 applies to international banking charges for SWIFT services.
- Subject to VAT under the reverse charge mechanism.
- Qualifying SWIFT Message can replace a self-issued tax invoice.
- Input VAT recovery allowed if charges relate to taxable supplies and are documented.
- Input VAT can be claimed in the tax period when the message is received if payment is made or intended within six months.
- Reverse charge mechanism shifts VAT responsibility to the UAE financial institution.
- Qualifying SWIFT Message must include specific details like supplier and recipient information, transaction date, and amount charged.
- Offers administrative relief but requires robust recordkeeping and VAT compliance.
- Reduces the burden of issuing self-tax invoices for each SWIFT transaction.
- Requires detailed and compliant SWIFT records for VAT recovery.
- Institutions must ensure systems can generate and retain Qualifying SWIFT Messages for audits.
- Input VAT recoverable only if related to taxable business activities.
Source: nrdoshi.ae
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
