UAE banks directed not to increase fees due to VAT
The UAE Central Bank has asked local banks not to increase the existing fees for customers due to upcoming ValueAdded Tax (VAT).
"Banks and finance companies will not be permitted to exceed the fees structure for individual customers because of VAT," reads the notice sent by the apex bank to local banks in the UAE today. It also asked the banks not to increase their existing fees structure and levels for nonindividual customers as a result of VAT. As part of the GCC framework agreed among the regional bloc, the UAE will levy five per cent VAT from January 1, 2018 on a host of goods and services. Saudi Arabia will also join the UAE in implementing VAT. Other regional countries will implement VAT at a later stage.
Mayank Sawhney, director, MaxGrowth Consulting, earlier told Khaleej Times that Processing Fee, File Opening Fee, Assessment Fee, Evaluation Fee, Account Management Fee etc. charged by the banks will be subject to 5 per cent VAT in the UAE.
In case of credit cards, fees such as Annual Credit Card Fee, Late Payment Fee, Processing Fee for transferring out- standing payment from one credit card to another etc. will attract five per cent VAT, Sawhney adds. The UAE Central Bank told banks and financial companies that they will absorb the applicable VAT until further instructions from the apex bank. Moreover, any applicable VAT on the services provided by the Central Bank will be absorbed by the Central Bank, said the notification.
Meanwhile, The UAE is increasingly becoming a hub for FinTech startups by attracting regional and global players to set up shop here. Attracted by strong support from government-related entities and the adoption of latest technologies by local banks and financial institutions, global FinTech startups have shown keen interest to have a regional base in the UAE to cater to other regional markets.
FinTech startups such as India's FTCash and FRSLabs, Canada's Market IQ, Singapore's Alpha FinTech and Silent Eight and a host of other companies have expressed interest to open an office in the UAE. "We are actively looking to open an office in Dubai and Abu Dhabi to cater to the Middle East. You need to have a local presence to achieve growth. We are in talks with local partners," said Deepak Kothari, co-founder and COO, FTCash.
Singapore's Silent Eight - which won the Innovation Challenge at Fintech Abu Dhabi on Sunday - is also looking to open a UAE office. "We came five weeks ago and the first thing we wanted to see in this region is how local banks care about problem statements. We see there is demand for our solutions in this region," said Martin Markiewicz, CEO of Silent Eight.
Myra R. Ali, head of client relations and strategy, Market IQ, said: "We are looking to open offices in Dubai and Abu Dhabi. We were part of the Dubai Future Accelerator programme earlier." India's FRSLabs, the winner of the Innovation Challenge at FinTech Abu Dhabi, hopes to have an office operational in the next year.
"Not just the UAE, we are also looking to expand in the whole Measa region. We want to have a presence in a place which is not just a sales hub but also a pioneer in terms of supporting the FinTech industry. In this part of the world, we need to have face-to-face meetings due to cultural reasons. We aim to have a presence in one year," said Shankar P., founder and CEO, FRSLabs.
Ronan McDonnell, marketing coordinator, Alpha Fintech, said the aim is to open an office next year. "In the next couple of weeks, we will be talking to banks and show them the value of our solutions. You need people locally.
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