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Can you claim VAT on bank feesin the UAE?

Last reviewed

Can you recover the VAT?
Recoverable
VAT charged
5% on fees; none on interest
Corporate tax
Deductible

Recoverable on transfer, SWIFT, and card fees. Interest and FX spreads carry no VAT.

When you can claim the VATand when it's blocked

You can claim

  • VAT appears on explicit fees such as account maintenance, transfer, SWIFT, card annual, and remittance fees.
  • It is recoverable when the fee relates to your taxable business.
  • Interest and FX spreads are exempt and carry no VAT.

You can't claim

  • Businesses making exempt supplies (for example residential leasing) must apportion.
  • Fees on personal accounts are not recoverable.

Worked examplesand why they land that way

  1. Recoverable

    AED 100 international transfer fee plus AED 5 VAT

    Explicit bank fees like transfer, SWIFT, and account charges are standard-rated. The AED 5 is recoverable as long as the account serves your taxable business. Most UAE banks issue a monthly VAT statement you can use as the invoice.

  2. No VAT to recover

    Loan interest

    Exempt, nothing to recover.

    Interest is a margin-based financial service, which is exempt. There's no VAT on it to recover. The interest is deductible for corporate tax, though very large amounts can be limited by the interest limitation rule.

  3. Recoverable

    Card processing fees billed from Ireland

    Reverse charge.

    The processor bills from abroad with no UAE VAT, so you account for 5% under reverse charge. For a business making taxable sales, you claim the same amount back in that return.

What to keepand what to watch

Documents you need

Bank tax invoice or statement showing VAT and the bank's TRN. Most UAE banks issue monthly VAT statements on request.

Corporate tax

Deductible. Fees are deductible. Large net interest expense can be restricted under the general interest limitation rule.

GL account: Bank charges / Interest expense

Common mistakes

Treating all bank charges as 0%. Missing reverse charge on payment gateway fees billed from overseas.

Reverse charge and imports

Payment processors billing from abroad may require reverse charge.

How reverse charge works

Questions peopleask about this

Do UAE banks charge VAT on fees?

Yes, on explicit fees like account maintenance, transfers, SWIFT, card annual fees, and remittances. Interest and FX spreads are margin-based services, which are exempt.

What counts as the tax invoice for bank fees?

The bank's tax invoice or statement showing the VAT and the bank's TRN. Most UAE banks issue a monthly VAT statement on request.

What about Stripe or PayPal fees?

Payment processors billing from abroad don't charge UAE VAT, so you may need to account for it under reverse charge. It's normally recovered in the same return.

Does a business with exempt income get full recovery?

No. A business that also makes exempt supplies, like residential leasing, apportions the VAT on shared costs such as bank fees.

Relatedexpenses

Rules thisanswer relies on