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Excise tax to be paid in e-Dirham only

Initial estimates show that excise tax will generate as much as $1.9bn in annual revenues for the Federal Budget

By Staff writer
The UAE is the second GCC state after Saudi Arabia to apply excise tax. Photo: FAYEZ NURELDINE/AFP/Getty Images.
The UAE is the second GCC state after Saudi Arabia to apply excise tax. Photo: FAYEZ NURELDINE/AFP/Getty Images.

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 e-Dirham G2 system implemented in 2011 is combined with leading payment networks and schemes via platforms, and configured to be flexibly integrated with e-Government service applications. They can also be configured to work with online payment applications, payment via mobile phones, and electronic collection via different payment channels in line with universal standards.

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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