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.


Sec­re­tary, Eco­nomic Af­fairs Di­vi­sion, Arif Ahmed Khan and Euro­pean Union Deputy Head of Mis­sion, Ms. Anne Mar­chal sign­ing grant fi­nanc­ing agree­ment on pro­mo­tion of Hu­man Rights in Pak­istan.

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