VAT Public Clarification on SWIFT MESSAGES
On Apr 14th of 2025, Federal Tax Authority (FTA) have issued VAT public clarification (VATP041) on VAT implication on Swift Message replacing the previous VATP036. UAE Banks and exchange houses (“Financial Institutions” or “FI”)
FI incur international bank charges from banks outside the UAE as a result of using the Society for Worldwide Interbank Financial Telecommunications (“SWIFT”) communication system with these banks. The provision of the right to use the SWIFT communication service constitutes a Service for VAT purposes.where such Service is received from outside the UAE, it constitutes a Concerned Service for UAE VAT purposes and covered under RCM on import of services.
Financial Institutions that are registered for VAT in the UAE are required to issue and deliver an original Tax Invoice to the recipient of taxable services supplied by the Financial Institution. Since the Financial Institution is regarded as supplying the Concerned Service to itself, it is required to issue a valid Tax Invoice to itself in respect of each SWIFT transaction for which it incurs interbank charges.
However, Article 59(7)(b) of the Executive Regulation provides that, where there are (or will be) sufficient records available to establish the particulars of any supply or class of supplies, and it would be impractical to require the issuance of a Tax Invoice by the Registrant, the FTA may determine that a Tax Invoice is not required to be issued in certain cases.Therefore, with VATP041 FTA have recognized the impracticality for FI to issue tax invoices in respect of each SWIFT message and the SWIFT Message will be accepted as a sufficient record to establish the particulars of the supply provided following information is there in the SWIFT message
- Name and address of the bank outside the UAE (SWIFT sender/supplier).
- Name of the UAE Financial Institution receiving the Service (SWIFT receiver/customer).
- Date of the transaction.
- SWIFT Message reference number.
- Transaction reference number.
- Description of the transaction.
- Consideration charged and currency used.
- Public clarification (VATP041) is only for FI not for all other taxable person.
- As the underlying clarification is only for FI, all other taxable person should raise tax invoice to itself for all the import of goods or services.
- If the taxable person not raising the tax invoice for import of goods or services, they should apply for private clarification for administrative exception for not raising tax invoice for import of goods or services.
