The United Arab Emirates (UAE) has mandated the use of e-Dirham for settling excise tax liabilities. Implemented in 2017, this policy aims to streamline tax collection and enhance transparency in financial transactions between businesses and the government. The e-Dirham system, introduced by the Ministry of Finance in 2011, functions as a prepaid digital wallet designed specifically for conducting government payments.
Prior to the e-Dirham requirement, businesses had more flexibility in remittance methods for excise tax. However, the centralized e-Dirham platform offers several advantages for both the government and businesses. For authorities, it ensures efficient collection and tracking of excise tax revenue, which is levied on specific goods like tobacco, sugary drinks, and energy drinks. This revenue is then directed towards financing essential government services and social programs.
For businesses, e-Dirham simplifies the excise tax payment process. The digital wallet eliminates the need to navigate complex tax codes or manage multiple payment channels. Additionally, e-Dirham facilitates secure and swift transactions, minimizing the risk of errors or delays associated with traditional payment methods.
The UAE government has partnered with the National Bank of Abu Dhabi (NBAD) to administer the e-Dirham system. Businesses can acquire e-Dirham cards through NBAD or its designated outlets. These cards can be reloaded with funds similar to prepaid cards, allowing businesses to manage their excise tax payments efficiently.
While e-Dirham is the primary mode for excise tax payments, the Federal Tax Authority (FTA) does offer alternative options for exceptional cases. Businesses can explore settling their dues via bank transfers, both local and international. However, e-Dirham remains the preferred channel due to its ease of use and efficiency.
The UAE's shift towards a digitalized excise tax collection system reflects a broader governmental objective of fostering a cashless economy. By promoting e-Dirham, the government aims to not only streamline tax collection but also encourage wider adoption of digital payment methods across the country. This digital transformation is expected to enhance financial transparency, reduce administrative burdens, and propel the UAE towards a more technologically advanced economy.