The Public Clarification outlines the VAT obligations and input tax documentation requirements for financial institutions incurring SWIFT-related interbank charges.
The UAE Federal Tax Authority (FTA) issued Public Clarification VATP041 on 28 April 2025, replacing VATP036, to clarify VAT obligations related to SWIFT charges incurred by financial institutions and the associated input tax documentation requirements.
Under the clarification, financial institutions in the UAE that receive interbank services via the SWIFT communication system must account for VAT using the reverse-charge mechanism. Although these services from foreign banks typically lack tax invoices, institutions are generally required to issue self-tax invoices.
However, due to practical difficulties, the FTA permits financial institutions not to issue such invoices if the SWIFT Message contains sufficient details to identify the supply, termed a “qualifying SWIFT Message.”
Furthermore, input tax on these interbank charges is recoverable only to the extent that the costs are used to make taxable supplies. The FTA confirms that a qualifying SWIFT Message may serve as adequate documentary evidence to support input tax recovery, provided all other requirements are met.
