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VAT on financial services is applicable at 5% unless specifically exempted from the VAT. As per the Executive Regulation to the Decree Law, Financial services are services connected to dealings in money (or its equivalent) and the provision of credit and include:
  1. explicit fee, commission, discount, and rebate or similar for the exchange of currency, whether effected by the exchange of bank notes or coin, by crediting or debiting accounts, or otherwise.
  2. explicit fee, commission, discount, and rebate or similar for the issue, payment, collection, or transfer of ownership of a cheque or letter of credit;
  3. explicit fee, commission, discount, and rebate or similar for the issue, allotment, drawing, acceptance, endorsement, or transfer of ownership of a debt security;
  4. explicit fee, commission, discount, and rebate or similar for the provision of any loan, advance or credit;
  5. explicit fee, commission, discount, and rebate or similar for the renewal or variation of a debt security, equity security, or credit contract;
  6. explicit fee, commission, discount, and rebate or similar for the provision, taking, variation, or release of a guarantee, indemnity, security, or bond in respect of the performance of obligations under a cheque, credit, equity security, debt security
  7. explicit fee, commission, discount, and rebate or similar for the operation of any current, deposit or savings account;
  8. explicit fee, commission, discount, and rebate or similar for the provision or transfer of ownership of a financial instrument such as derivatives, options, swaps, credit default swaps, and futures;
  9. explicit fee, commission, discount, and rebate or similar for the payment or collection of any amount of interest, principal, dividend, or other amounts whatever in respect of any debt security, equity security, credit, contract of life insurance;
  10. explicit fee, commission, discount, and rebate or similar for agreeing to do, or arranging, any of the activities above, other than advising thereon.
The following financial services shall be exempted:
  1. Activities above where they are not conducted in return for an explicit fee, discount, commission, and rebate or similar.
  2. The issue, allotment, or transfer of ownership of an equity security or a debt security;
  3. The provision or transfer of ownership of a life insurance contract or the provision of re-insurance in respect of any such contract.

 

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The entire contents of this article is solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation.. It doesn't constitute professional advice or a formal recommendation. The author has undertook utmost care to disseminate the true and correct view and doesn't accept liability for any errors or omissions. You are kindly requested to verify & confirm the updates from the genuine sources before acting on any of the information's provided herein above.

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