UAE Insurance VAT Guide: Applicability, Rate, Key Considerations and Treatment (2025)

VAT on insurance in UAE depends on the type of insurance being provided. Generally, insurance is considered a taxable service in the UAE, and insurers are expected to charge VAT on the premiums they collect. However, the law carves out specific exceptions for two key areas:

• Life insurance and related reinsurance: exempt from VAT
• Insurance related to international transport: zero-rated
• All other insurance types, like health, motor, property, business, etc.: typically subject to standard 5% VAT

VAT and Insurance in the UAE

Insurance is a service provided under a contract where the insured party is entitled to a benefit when a specific uncertain event happens (e.g., accident, illness, fire, etc.). The insurer agrees to take on the risk of that unfortunate event happening, in return for a premium paid by the insured.

The insurer offers this coverage, and the insured accepts based on a legal agreement, called the insurance. So, essentially, insurance is just the contract that creates a binding obligation for the insurer to provide financial protection if the stated event occurs.

So, from a VAT perspective, since there’s a clear exchange of value, insurance becomes a taxable supply. So, insurance and related services are generally subject to standard VAT of 5%. Most insurance premiums collected by insurers typically include VAT. They can use the VAT collected to offset the outgoing VAT that they paid on costs related to these taxable insurance services. 

Exemptions from VAT in Insurance

Some insurance services are exempt from VAT, specifically:

• Life insurance contracts and their associated reinsurance are exempt. This means no VAT is charged on premiums for life insurance.
• The exemption applies because these are considered financial services remunerated by an implicit margin rather than an explicit fee.
• Insurers cannot recover VAT on costs wholly attributable to these exempt supplies.

VAT Applicability and Rate on Insurances in the UAE

While most insurance services are subject to the standard 5% VAT, certain categories, such as life insurance, have special exemptions or zero-rating. The table below summarises it:

VAT Registration for Insurance Companies

Just like for every other industry, the VAT registration requirements are same for the insurance companies. They are needed to register for VAT if their taxable supplies and taxable imports exceed the mandatory registration threshold, i.e. currently AED 375,000 per year. 

Since most insurance services are standard rated and subject to VAT, insurers must comply with VAT rules, including charging VAT on premiums, filing regular VAT returns, and maintaining proper records. Even insurance intermediaries, such as agents and brokers, need to register if their taxable turnover exceeds the threshold and charge VAT on their commissions or fees accordingly.

Conclusion

Different insurance products have different VAT treatments in the UAE. However, the UAE’s VAT system is straightforward, with only three possible rates: 

• 5% (standard rate)
• 0% (zero-rated)
• Exempt

It’s important to remember that for insurance, most products are subject to the standard VAT of 5%, except for life insurance and international transport insurance.