VAT on Insurance in the UAE

In 2023 the UAE insurance market reached about AED 53.2 billion in gross written premiums, a 12.7 percent rise on the previous year. 

At the same time, VAT continues at a standard 5 percent rate on most supplies under the federal system for VAT in Dubai and the wider UAE. 

Insurance businesses now sit at the junction of financial-services rules, health mandates and VAT guidance, so clean treatment matters for both insurers and corporate policyholders.

Overview of VAT on Insurance in the UAE

The Central Bank of the UAE acts as the unified regulator for the insurance sector after absorbing the former Insurance Authority. crowe.com VAT law treats insurance as a financial service, yet not all contracts share the same status.

The FTA’s Insurance VAT Guide (VATGIN1) explains that, as a starting point, insurance and related services are standard rated at 5 percent, except for specific exemptions and zero-rated cases. 

Standard Rated Insurance – Health, Motor And Property

General VAT on insurance in UAE

For most policies, VAT on insurance in UAE applies at 5 percent on premiums, administration fees and many related charges. This covers health, motor, property, liability and many commercial covers offered to residents.

When the policyholder is in the UAE and the risk sits in the UAE, insurers charge VAT at the standard rate and account for it in their periodic returns. 

VAT On Health Insurance and Employee Schemes

For compulsory medical cover, VAT on health insurance UAE is generally standard rated. Employers may recover input tax on premiums where health cover is required by law or forms part of contractual remuneration, subject to normal recovery principles. 

Where extended family cover sits outside legal duties, related input VAT often becomes blocked because the benefit is not considered a business cost in the strict sense. 

Reinsurance, brokers and other services

Reinsurance of standard-rated risks usually follows the same 5 percent rule when the reinsurer belongs in the UAE. Broker commissions and administration charges for general business also attract VAT, since they represent explicit fees instead of implicit financial margins. 

Exempt and Zero-Rated Insurance

VAT on life insurance UAE

The law and Executive Regulation carve out life insurance and its associated reinsurance as exempt financial services. That means VAT on life insurance UAE does not apply to premiums paid by UAE-resident policyholders. 

Insurers in this segment cannot recover input VAT on costs that link directly to exempt life products. So marketing, claims and administration costs often carry VAT as an expense.

International transport and export insurance

Insurance linked to international transport of goods or passengers is usually zero rated when conditions in the Executive Regulation are met.

Exported insurance services supplied to customers outside GCC implementing states may also be zero rated, allowing full recovery on related costs.  

Insurers must test where the policyholder belongs, where the risk sits and how performance is enjoyed before concluding that zero rating applies.

Input VAT Recovery and Apportionment

Fully taxable insurers

Insurers that write only standard-rated and zero-rated business can usually claim full input VAT on costs, since all activity supports taxable supplies. For many general insurers this keeps VAT neutral except for timing differences between purchases and premium income.

Mixed portfolios

Where insurers write both taxable lines and exempt life business, the FTA expects input tax apportionment. Common methods use turnover ratios or headcount, though a special method may be agreed if standard rules yield unfair results. 

Costs that relate clearly to one branch, such as life-underwriting systems, must be ring-fenced before applying any general apportionment calculation.

Practical Issues For Insurers And Policyholders

Policy wording, fees and VAT on insurance in Dubai

For VAT on insurance in Dubai, wording on premiums and fees matters. Composite policies may bundle exempt life components with taxable riders like accident or health benefits. 

Insurers must decide whether the contract is a single composite supply or a set of separate supplies, then apply one rate or split VAT accordingly. Errors here affect both pricing and audit exposure. 

HR planning and corporate health covers

Employers often treat medical insurance as part of HR strategy. For corporate schemes, VAT on health insurance UAE becomes a question of business purpose and legal requirement. 

Where cover is mandatory under local health laws or written into employment contracts, VAT on premiums can often be recovered. Optional upgrades or family extensions more often stay blocked. 

How Arnifi supports insurance VAT compliance

Insurers and large corporate buyers now deal with Executive Regulation amendments, new public clarifications on financial services and evolving Central Bank rules at the same time. 

Arnifi works with finance and tax teams that want stable VAT positions for insurance portfolios, especially where life, medical and general lines mix in one structure.

Typical projects map each policy type to the correct VAT status, test invoices against FTA guidance and design apportionment methods that stand up during audits. This reduces disputes over VAT on insurance in UAE and keeps compliance effort in proportion to actual risk.

Conclusion

VAT on insurance in the UAE turns on contract type, customer location and how benefits are structured. Most non-life policies stay standard rated at 5 percent, while life cover and certain international-transport risks fall under exemption or zero rating. 

Clear mapping of these rules protects margins for insurers and gives corporate buyers confidence about real premium costs. Arnifi helps build that map, linking VAT in Dubai law to day-to-day insurance contracts and keeping FTA reviews easy for all sides.

FAQs on VAT and Insurance in the UAE

1. Is VAT charged on most insurance premiums in the UAE?

Most insurance premiums face 5 percent VAT under UAE rules. Insurers add VAT to standard-rated covers, then report and pay the tax through regular VAT returns.

2. How is VAT on life insurance UAE treated for residents?

Life insurance premiums for UAE residents are exempt, so no VAT appears on those invoices. Insurers usually cannot recover VAT on costs linked directly to exempt life business.

3. What is the VAT treatment of health insurance provided to staff?

Compulsory employee health cover is generally standard rated at 5 percent. Employers may recover input VAT where cover is legally required or forms part of contractual benefits.

4. Are insurance broker commissions subject to VAT?

Broker commissions on general insurance normally attract 5 percent VAT as explicit service fees. Commissions linked to exempt life products are usually exempt or follow the underlying exemption.

5. How does mixed life and general insurance activity affect input VAT?

Insurers with both taxable and exempt lines must apportion input VAT. Direct costs link to each branch, while shared overheads follow a fair method agreed with, or acceptable to, the FTA.