UAE Excise Tax will be collected in e-Dirham only, the Federal Tax Authority has announced.
e-Dirham was introduced by the Ministry of Finance in 2011 to develop a system of electronic channels and digital payment gateways to collect service fees and revenue for the Federal Government via prepaid cards.
The cards offer a smart payment method for more than 5,000 government services in ministries, Federal and local authorities, and the private sector.
The new tax, due to come into force on October 1, is being implemented to discourage the consumption of products that negatively impact people's health and the environment, according to the government.
The new indirect tax will see a 100 percent levy applied to the price of tobacco and energy drinks, and 50 percent for sugary fizzy beverages. Initial estimates show that excise tax will generate as much as $1.9 billion (AED7bn) in annual revenues for the Federal Budget.
The move to adopt the use of e-Dirham goes in line with the UAE government’s strategy to keep pace with the latest technological developments in areas of fintech and revenue collection and ensure transparency, efficiency and safety in financial transactions
The UAE is the second GCC state after Saudi Arabia to apply excise tax.
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