Dubai - Decypha:  As health insurance is mandatory for all residents since 2014, the new value added tax (VAT) on non-life insurance in the UAE is expected to drive up the cost of health and motor Gurdeep Randhay, Head of Tax at Grant Thornton told Zawya.

Motor and health insurance policies account for 70% of the market. The drop in oil prices has severely impacted the insurance sector, with many UAE companies struggling with the increasing cost of health and motor insurance.

The Gross Written Premiums (GWPs) for the UAE insurance sector was 40 billion dirhams in 2016 versus 37 billion dirhams in 2015, according to the UAE’s Insurance Authority website.

The 5% VAT will be implemented in January of 2018 across six nations of the Gulf Cooperation Council (GCC). The UAE government has exempt some sectors, such as health, residential properties, education, and certain types of public transportation from the tax, according to Decypha.

GCC governments are given one year post launch to implement the VAT in their countries.

By Decypha Editorial Team