No VAT will be levied on amount withdrawn from other bank’s ATM
by Unitedvat
Dec 02, 2017 Dec 02, 2017
by Unitedvat
Posted on Dec 02, 2017
According to the tax experts in UAE 5% VAT will not be levied on amount withdrawn from ATMs of banks other than their own bank - but only on the Dh2 fee will be charged by the banks.
Nirav Shah, director, Fame Advisory said "When you withdraw from your account, there is no transaction, so VAT does not apply in such case." He further, added, banks will be subject to include VAT on all their fees which will be displayed for the customer, for which they need to do compliance at their end.
However, 5 per cent VAT will be levied on the Dh2 fee charged by banks when withdrawing from ATMs of other banks - which translate to around a nominal 10 fills per transaction.
For instance, a customer has an account with Bank A and he withdraws Dh10,000 cash from Bank B's ATM, he will not be charged on the withdrawal amount of Dh10,000.
Explaining further MayankSawhney, director, MaxGrowth Consulting said "The VAT will be payable only on the fee charged by the banks which is a nominal amount of Dh2 per transaction in general. So after applying five per cent VAT, it will become Dh2.10 from January 1, 2018 onwards. In essence, it does not hit customers' pockets because even if you do 50 such transactions in a month, your total cost is going to rise maximum by Dh5," He noted that banks will have to absorb most of the VAT charged on them by their vendors and suppliers because VAT on majority of their output is exempt, so they cannot recover input VAT they pay to their vendors for various goods and services procured by them.” He also insisted that banks may increase their transaction fee for ATM withdrawals from other banks' ATMs from Dh2, currently, to Dh3 or Dh5 with effect from January 1, 2018, and If not immediately, banks may hike their fees over the period.
Declining the news of the delay in implementation of VAT in UAE Khalid Ali Al Bustani, director general of the Federal Tax Authority, says VAT will start as planned on Jan 1 2018.
Executive Regulations for the Federal Decree-Law No. (8) of 2017 on Value Added Tax, VAT were signed and approved by the Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE.
