Value Added Tax’s (VAT) fundamental nature is that it’s not taxation imposed on businesses. Instead, it’s a type of tax that’s collected by business entities operating in the UAE that is rather imposed on end consumers by the local tax authorities.

1. IS VAT ON INSURANCE
TAXABLE?
https://vatregistrationuae.com/vat-insurance-
uae-taxable/

2. INT.
Value Added Tax’s (VAT) fundamental nature is that it’s not taxation
imposed on businesses. Instead, it’s a type of tax that’s collected by
business entities operating in the UAE that is rather imposed on end
consumers by the local tax authorities.

3. VAT TREATMENT OF DIFFERENT
TYPES OF INSURANCE IN UAE
Consistent with VAT’s essential nature, taxation of insurance
products or related services differ in terms of liability of charges.
Issued by the UAE Federal Tax Authority or FTA, the VAT Guide or
VATGIN1 has provided clarifications on VAT rates of several different
insurance-related products and services.

4. GENERAL INSURANCE
General insurance includes motor insurance, fire and theft, real estate
insurance, and contents insurance. Liability of charges will be as
follows:
Zero rate – if the recipient of the general insurance is a resident
outside any GCC implementing state, is located outside of the UAE,
and performance of insurance service isn’t received by someone who
is in the UAE that won’t be allowed in recovering incurred VAT.
Standard rate – if the recipient of the general insurance is a UAE
resident

5. LIFE INSURANCE
This category includes individual insurance, group insurance, life
annuity, term, and investment-linked policy. In all cases, the
following liability of charges apply:
Exempt from VAT – if the recipient of life insurance is a UAE resident
Zero rate – if the recipient of life insurance is a resident that’s outside
any GCC implementing state, is located outside of the UAE, and
performance of insurance service isn’t received by a legal entity in
UAE who wouldn’t be able to process VAT recovery for VAT incurred.

6. INTERNATIONAL TRANSPORT
This includes insurance for the transportation of passengers and aviation or marine cargo.
VAT treatment for such will be zero-rated with respect to international transportation
services with the exemption of travel insurance.
International transportation is defined as:
Transportation of products or passengers which starts from the UAE then ends outside of
UAE
Transportation of products or passengers which starts outside UAE and ends in UAE
Transportation of passengers that are from a place in UAE onto another place in UAE
either by land, air or sea of international transport of passengers if final destination place
or 1st place of departure is outside UAE
Transportation of goods that are from UAE to another place within UAE if services are
supplied for the purpose or part of international transportation of products either from
UAE to any place outside UAE or from any place outside UAE onto UAE.
Insurance with international transportation includes the act of arranging any form of
insurance.

7. TRAVEL INSURANCE
Travel insurance will be liable for a VAT rate of:
Standard rate – if the recipient of the travel insurance is a UAE
resident
Zero rate – if the recipient of life insurance is a resident that’s outside
any GCC implementing state, is located outside of the UAE, and
performance of insurance service isn’t received by a legal entity in
UAE who wouldn’t be able to process VAT recovery for VAT incurred.

8. OTHER TYPES OF INSURANCE
Medical insurance, accident insurance, public liability, and public
indemnity insurance will have the following VAT treatment in UAE:
Standard rate – if the recipient of the travel insurance is a UAE
resident
Zero rate – if the recipient of life insurance is a resident that’s
outside any GCC implementing state, is located outside of the UAE,
and performance of insurance service isn’t received by a legal entity
in UAE who wouldn’t be able to process VAT recovery for VAT
incurred.
Take note: Reinsurance will have the same general principles
mentioned above.

9. WHAT ARE CONSIDERED
INSURANCE PRODUCTS AND
SERVICES IN UAE?
The products and services that are provided to consumers by persons or businesses which
involve any of the following are considered as insurance:
A contract that provides the insured becoming entitled to something should a specific
event occurs;
The event must be something that involves the element of uncertainty;
Insured by an insurance contract must have insurable interest with the contract’s
subject matter
In practice, the insurer makes an offer to the potential party to be insured, which it either
approves of or rejects. Contracting parties must all be in agreement with the intention of
an insurance contract. There must also be the intention in entering into a legal
relationship under which a party has the obligation in providing insurance. Lastly, there
must be a benefit, right, or some payment offered by the party that’s potentially issued to
the insurance contract. Premium forms policyholder or insured’s consideration for the
promise of insurer to pay in accordance to terms of the insurance policy.
Risks that are covered by insurance contracts can be wide. They include loss of profits, life
and endowment, general indemnity, motor vehicles, fire accidents.
For more tailored advice on the applicability of VAT on your business transactions, call us
here in VAT Registration UAE to speak with our regulated tax agents in Dubai! Contact us
now.

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