FAQs

What is a remittance?

A remittance is a payment of money that is transferred to another party. Broadly speaking, any payment of an invoice or a bill can be called a remittance. However, the term is most often used nowadays to describe a sum of money sent by someone working abroad to his or her family back home.The term is derived from the word remit, which means to send back.

Most remittances are made by foreign workers to family members in their home countries. The most common way of making a remittance is by using an electronic payment system through a bank or a money transfer service. People who use these options are generally charged a fee. Transfers can take as little as ten minutes to reach the recipient.

What happens if you fail to comply with the Digital Tax Stamp system?

In accordance with the FTA decision no. 33 of 2019 on violations of procedures to mark designated excise goods, penalties await those who fail to place the Digital Tax on the packaging of tobacco products. Some of the penalties on violation of Digital Tax Stamps regulation are as follow:

  • A penalty of AED 50,000 plus 50% of the amount of excise tax due, will be collected from a person possessing or supplying unmarked designated excise goods.
  • A penalty of AED 25,000 to AED 50,000 will be slapped on those people who allow the sale of unmarked Designated Excise Goods in their facilities. It will be AED 25,000 for the first instance of violation and 50,000 for repeated violations.
  • A penalty of AED 50,000 plus 50% of the amount of excise tax due will be levied if a person modifies or prints over Digital Tax Stamps fixed on designated excise goods.
  • In the event of failing to inform a transfer of designated excise goods, a penalty of AED 20,000 is levied for every time the breach is committed.

Know more about the Digital Tax Stamp Scheme.

Why was the Digital Tax Stamp system implemented?

FTA’s marking of tobacco and tobacco products is a new milestone in the excise tax system in the UAE. With the new tax managing program, the FTA is hoping to achieve the following goals:

  • The scheme is likely to safeguard the consumers from commercial fraud and low-quality products.
  • It will enable the FTA to tackle tax evasion in an efficient manner.
  • It empowers the FTA to collect and control taxes on all imported or locally made tobacco products sold in the UAE market.
  • The scheme allows the FTA to monitor and curb the sale of illicit products in the market as relevant authorities are entrusted with analyzing and auditing the supply chain.

Know more about the Digital Tax Stamp Scheme.

What is the Digital Tax Stamp system?

The Digital Tax Stamp system is a tax managing scheme introduced by the FTA in August 2019. The new excise tax scheme mandates that tobacco manufacturers and stakeholders are required to comply with FTA’s improved standards when they import and sell tobacco products in the UAE market.

In line with the new excise tax system, the tobacco manufacturers are required to mark their products with the Digital Tax Stamp at their production facility after the packaging, if the production is done locally. The stamp must be put before importing if the products are imported.

The Digital Tax Stamp is in news again as the import of waterpipe cigarettes or e- cigarette not marked with Digital Tax Stamps will not be permitted to be sold across the UAE from 1st January 2021. The initiative of banning the import of waterpipe tobacco not marked with digital tax stamp is in line with the second phase of FTA’s Tobacco Products Scheme. The main aim of the DTS system is to combat commercial fraud and tax evasion. (Visit the site tax.gov.ae/dts)

You must register for the Digital Tax Stamp if you are:

  • A UAE based or international cigarette producer who imports products into the UAE for domestic sale or for duty-free outlets like airports and ports.
  • An officially licensed importer who will purchase cigarette products in bulk from an international or domestic producer to sell or distribute in the UAE market or duty-free outlets.
  • A distributor or supply chain agent or warehouse keeper who receives the imported goods for sale in the UAE market or duty-free outlet.

Know more about the Digital Tax Stamp Scheme.

For more questions on tax, whom should I contact?

If you would like to know more about the taxes applicable in the country, you can contact the Federal Tax Authority (FTA), the government entity that is responsible for implementing federal taxes such as VAT or excise tax. You can contact the FTA by calling them at 600-599-994.

On the other hand, if you require more information on the Tourism Dirham in Dubai, you can contact the Dubai Tourism authority at 600-555-559.

Meanwhile, you can find out more about the tourism and municipality fees in Abu Dhabi by contacting the Department of Culture and Tourism at 800-555.

What are the goods exempted from excise tax?

The excise tax will not be applied to the following goods in the UAE:
1. Ready-to-drink beverages (with at least 75% milk or milk substitutes).
2. Baby food or baby formula.
3. Beverages for special dietary needs as recognized under Standard 654 of the GCC Standardization Organization.
4. Beverages consumed for medical uses as recognized under Standard 1366 of the GCC Standardization Organization.

Which goods is excise tax applicable to?

For those wondering ‘what items have excise tax in the UAE’, this tax applies to the consumption of the following goods:
– Tobacco products
– Carbonated drinks (this does not include sparkling water)
– Energy drinks
– Electronic smoking devices and tools (and liquids used in these devices)
– Sweetened drinks

Is there a tourist tax in the UAE?

Yes, tourist tax is levied by restaurants, hotels, hotel apartments and resorts in the UAE. These tourist facilities may charge one or more of these taxes in the UAE:

– 10% on room rate
– 10% as service charge
– 10% as municipality fees
– City tax (which ranges between 6% –10%)
– 6% as tourism fee

Is there a social security regime?

The UAE does not impose social security on foreign workers.

The social security regime in the UAE applies to UAE and GCC national employees only. In most of the Emirates, and for a UAE national employee, social security contributions are calculated at a rate of 17.5% of the employee’s gross remuneration as stated in the employment contract. Out of the 17.5%, 5% is payable by the employee and the remaining 12.5% is payable by the employer (15% in Abu Dhabi, where the overall rate is 20%).

What are the conditions for refund for UAE’s VAT?

For a tourist to claim VAT refund on purchases he made in the UAE, he must fulfill certain conditions:

1. Goods must be purchased from a retailer who is participating in the ‘Tax Refund for Tourists Scheme’

2. Goods are not excluded from the Refund Scheme of the Federal Tax Authority

3. He must have the explicit intention to leave the UAE in 90 days from the date of supply, along with the purchased supplies

4. He must export the purchased goods out of the UAE within three months from the date of supply

5. The process of purchase and export of goods must be carried out according to the requirements and procedures determined by Federal Tax Authority.