Excise Tax to be paid in e-Dirham only

The UAE Excise Tax, due to go into force effective 1st October, shall be collected in e-Dirham only, the Federal Tax Authority has announced.

The move 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 the Kingdom of Saudi Arabia, to apply excise tax, an indirect type of taxation which will help build a healthier and safer society. This tax is set to discourage the consumption of products that negatively impact the environment and, more importantly, people’s health, while the revenues it generates will go towards supporting advanced services for all members of society. It will reach 100 percent for tobacco and energy drinks and 50 percent for sugary fizzy beverages.

As per initial estimates, the tax is forecast to generate up to around AED7 billion in annual revenues for the Federal Budget.

e-Dirham is a smart technological achievement launched 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, in order to enhance the delivery of public services. 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 world-class payment networks and schemes, via platforms 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.