The Minister of Finance has introduced new Regulations* that impose VAT of 10% on the transfer of collateral by a creditor to the purchaser of the collateral.

The Regulations provide that “a creditor” can include any financial institution providing credit, including Sharia-based financing.
The creditor must issue a tax invoice and collect the VAT on receipt of payment from the purchaser. Any VAT collected must be remitted to the government by the end of the month following the month in which the VAT was collected.

*Minister of Finance Regulation Number 41 of 2023 concerning Value Added Tax on the Delivery of Collateral Taken Over by the Creditors to the Collateral Buyers.