Value Added Tax (or VAT) is a tax on the sale of most goods and services. The UAE and Saudi Arabia have confirmed that VAT will be implemented on 1 January 2018, whilst the other Gulf Cooperation Council (GCC) countries will follow soon after (Bahrain, Qatar, Kuwait and Oman).
VAT is an indirect tax. An indirect tax is a tax which is collected from customers by businesses (e.g. MetLife) and is passed on to the government. This tax will be used by the government to pay for public services- hospitals, schools etc.
The default VAT rate will be the standard rate of 5%. Some goods and services will be subject to VAT at 0%, and others will be exempt from VAT or outside the scope of VAT altogether.
A VAT registered business will charge and add VAT to the value of goods and services provided to customers. The VAT is collected by the business and paid to the Tax Authorities.
For new policies issued after 1 January 2018, if the product is subject to VAT, the premium payment will be subject to an additional 5%. This VAT will be paid by MetLife to the tax authorities.
The UAE Tax Authorities have yet to announce what exact insurance products will be subject to VAT, although we understand that life insurance will not be subject to VAT (i.e. VAT exempt), but non- life insurance will be subject to VAT at 5%.
If your policy will be subject to VAT (i.e. non-life policies), we will send to you a follow-up communication with the details of the new premium.
We do not expect VAT to affect the entitlements under your plan.
Yes, if VAT was charged on the premium and you have paid the VAT amount, we will refund the premium and VAT. However, no VAT will be refunded if there was no VAT charged on the initial premium.
If you as an individual move out of the UAE but within the GCC, VAT will still apply. If however you move outside the GCC subject to providing proof of change in address, as well as other proof which may be stipulated by the Tax Authorities, no VAT will be charged on your policy.
The Foreign Account Tax Compliance Act (FATCA) is a US tax reporting and withholding law which applies to US taxpayers.
The law is designed to combat tax evasion by US citizens, and it requires all financial institutions including MetLife to conduct due diligence on customers and Partners.
To comply with FATCA, MetLife operations must collect appropriate documentation and information from their customers and Partners to review indicators of US status and determine FATCA Compliance.
FATCA is applicable to ALL financial institutions around the world, regardless of the organization’s place of origin. From July 2014 onwards, no financial institution will be able to operate without complying with FATCA.
In addition, most of the GCC governments (Bahrain, Qatar, UAE and KSA) are in the process of signing Inter-Governmental Agreements (IGA) with the U.S. to allow the implementation of FATCA in all operating financial institutions in their countries.
In other words, no matter what company you use for your insurance services, the company will be subject to FATCA. At MetLife, we are committed to offering you our support and we will continue to update you on any FATCA developments and deadlines.