Financial services are services connected to dealings in money (or its equivalent) and the provision of credit and include for instance (1) The exchange of currency, whether effected by the exchange of bank notes or coin, by crediting or debiting accounts, or otherwise, (2) The issue, payment, collection, or transfer of ownership of a cheque or letter of credit, (3) The issue, allotment, drawing, acceptance, endorsement, or transfer of ownership of a debt security, (4) The provision of any loan, advance or credit, (5) The renewal or variation of a debt security, equity security, or credit contract, (6) The
provision, taking, variation, or release of a guarantee, indemnity, security, or bond in respect of the performance of obligations under a cheque, credit, equity security, debt security, or in respect of the activities specified in points (2) to (5) of this Article, (7) The operation of any current, deposit or savings account, (8) The provision or transfer of ownership of financial instruments such as derivatives, options, swaps, credit default swaps, and futures, (9) The payment or collection of any amount of interest, principal, dividend, or other amount whatever in respect of any debt security, equity security,
credit, and contract of life insurance and (10) Agreeing to do, or arranging, any of the activities specified in points (1) to (9) of this paragraph, other than advising thereon.
The following financial services shall be exempted: (1) Activities in the above paragraph where they are not conducted in return for an explicit fee, discount, commission, and rebate or similar, (2) The issue, allotment, or transfer of ownership of an equity security or a debt security and (3) The provision or transfer of ownership of a life insurance contract or the provision of re-insurance in respect of any such contract.
Islamic finance products, being financial products under contract which are certified as Islamic Shariah compliant, which simulate the intention and achieve effectively the same result as a non-Shariah compliant financial product, will be treated in a similar manner as the equivalent non-Shariah financial product for the purpose of applying exemption from Tax. Any supply made under an Islamic financial arrangement shall be treated in such a way as to give an outcome for the purposes of the Decree-Law and the decisions issued by the Authority, comparable to that which would be the case for their non-Islamic counterparts.
Where Article (31) of Cabinet Decision No. (52) of 2017 on the Executive Regulations of the Federal Decree-Law No (8) of 2017 on Value Added Tax applies in respect of a supply of financial services, this supply should be treated as zero-rated. Rest of the financial services shall be charged at the rate 5% VAT.