UAE Clarifies VAT Recovery on SWIFT Messages for Financial Institutions Using Reverse Charge Mechanism

• VAT recovery on SWIFT Messages is limited to financial institutions in the UAE
• Financial institutions must account for tax on interbank services from foreign banks using the reverse charge mechanism
• The FTA issued Public Clarification VAT P041 in April 2025, replacing VATP036
• This clarification addresses tax invoice requirements for SWIFT Messages and input tax recovery documentation
• UAE banks and exchange houses incur charges from foreign banks for using SWIFT
• SWIFT Messages do not meet all tax invoice requirements
• Financial institutions must issue self-tax invoices for interbank services
• The FTA allows not issuing tax invoices if SWIFT Messages contain sufficient supply details
• Input tax recovery is allowed if costs are for taxable supplies and sufficient evidence is retained
• A qualifying SWIFT Message is considered sufficient evidence for input tax recovery on interbank services

Source: kpmg.com

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.

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