Passively earned interest from bank deposits or dividend income cannot have VAT applied, the UAE Federal Tax Authority said on Tuesday. The government body said the income was “outside the scope of VAT”, as it issued a public clarification on bank interest and dividends. Banks began charging VAT on various services last summer following a June circular from the Central Bank of UAE detailing 43 new caps on fees and commission charged on consumer-related banking services. The circular specified that "all fees set out in this amendment are exclusive of VAT charges". It rescinded a December 2018 Central Bank notice informing banks they should absorb VAT charges until they received further instructions. Explaining the latest amendment, the FTA said there is no requirement for taxpayers to report the two types of income – bank interest and dividends – in a VAT return because the tax is only imposed on the import and supply of goods and services at each stage of production and distribution.