You may be aware that the UAE is implementing value added tax (“VAT”) at the standard rate of 5%, with effect from 1 January 2018. This will apply to most supplies of goods and services supplied from this date.
The UAE Ministry of Finance has some useful webpages dedicated to VAT, setting out how VAT will operate in the UAE. We suggest that you take a moment to consider how VAT might apply to you:
Application to our services
VAT will apply to supplies of goods and services from 1 January 2018, even if the contract for the supply of such goods or services was entered into before that date. This means that even though you have an existing agreement(s) with us (“Agreement(s)”), VAT may apply to any product/service we provide to you from 1 January 2018. This applies, without limitation, to agreements related to bank accounts products and services, Murabaha Finance, Ijarah Finance, various Islamic credit facilities and Islamic financing products, Wakala Agreements, Credit Cards, treasury services, any Shari’a compliant product and/or any other product and/or service we provide to you from 1 January 2018.
In order to reflect the introduction of VAT from 1 January 2018, we are including an Addendum (see below) as a further clause to the existing Agreements applicable to our services and financing arrangements. This means that if VAT is chargeable, we will normally debit your account for the VAT amount in the same way and at the same time as we debit your account for the underlying charge, expense or commission.
The UAE Ministry of Finance published Executive Regulations in respect of VAT on 28th November 2017 which provided clarity with respect to how VAT will apply to financial services and these Regulations are available on the MOF Webpage.
Acceptance of the Addendum at the Appendix
Your continued dealing with Emirates Islamic Bank PJSC (“Bank”) will be taken as your acceptance of the addition of the Addendum, as set out at the Appendix, to our existing Agreement with you.
Except as varied by the Addendum below, our existing Agreement(s) with you shall continue in full force and effect in all respects.
Tax Registration number
For customers who are or will be registered for VAT, please contact your relationship manager or your nearest branch in order to update your account details with your Tax registration number as soon as it is available.
We appreciate your continuing loyalty and look forward to working together in the future.
For and on behalf of Emirates Islamic Bank PJSC
APPENDIX
ADDENDUM TO OUR AGREEMENT WITH YOU
“VAT” means value added tax or any similar or substituted turnover or sales tax, imposed or administrated in the United Arab Emirates or elsewhere.
Any consideration to be paid or given for taxable supplies made by Emirates Islamic Bank PJSC to the other party is to be treated as exclusive of VAT. The recipient of any such supply shall, in addition to the consideration for the supply or service, pay to Emirates Islamic Bank PJSC an amount equal to any VAT chargeable in respect of the supply in question on demand by Emirates Islamic Bank PJSC.