Everything UAE Taxpayers Must Know about Magnati, the Replacement for E-Dirham
Taxpayers must be aware of the new method accepted by the Federal Tax Authority (FTA) for making tax payments in the UAE. The FTA has discontinued the use of e-dirham for paying taxes in the UAE and replaced it with Magnati, a smart payment system. You can consult with tax agents in Dubai to swiftly adapt to the new system of tax payment. We have listed some of the key things you must know about Magnati, the replacement for e-dirham. Read ahead to know further:
What Does the FTA Say about the Discontinuation of E-Dirham?
As per a communication sent by the FTA, the authority will stop accepting any payment made through e-dirham effective from October 30th, 2022. Introduced in 2001, the e-dirham was the preferred form of payment accepted by all the UAE ministries and government departments. This is in line with the UAE government’s decision to stop the usage of e-dirham in all ministries and departments. Consult with tax agents in the UAE for more information on the new changes in the tax payment system.
What Is Magnati, the Replacement for E-Dirham in the UAE?
Magnati is a smart payment option developed by the First Abu Dhabi Bank (FAB). Magnati, the fully owned payments subsidiary of FAB, makes payments seamless in diverse areas such as government services, healthcare, education, real estate, hospitality, F&B, retail and even parking solutions. Magnati boasts of a single Application Programming Interface (API) which makes integration easier, minimizes cost and effort, and enables customers to meet their specific payment requirements.
What Types of Tax Payment you can Make with Magnati?
The Magnati has been adopted by the Ministry of Finance to provide taxpayers with a smarter payment option to make seamless tax-related payments. You can make the following types of tax payments using Magnati:
- Value Added Tax (VAT)
- Excise Tax
- UAE Corporate Tax (once it takes effect on June 1st, 2023)
What are the General Features of Magnati?
Magnati is expected to ease the procedures of making tax payments with the UAE government authorities such as the FTA. However, tax agents in the UAE, advise you to check the features of Magnati before paying your taxes. The following are some of the top features of Magnati:
- Offers customised industry-specific solutions for users
- Offers card and electronic payment acceptance services for UAE government entities in the UAE, for both online and point-of-sale (POS) payments
- Supports smart routing, dynamic currency conversion (DCC) and multi-currency transaction processing capabilities
- Accepts all types of wallets such as Apple Pay, Samsung Pay, Google Pay, and FAB’s Payit
- Supports recurring payments, tokenisation, batch processing, Buy Now Pay Later (BNPL) and Easy Payment Plan (EPP) options
- Provides end-to-end visibility
- Robust solutions for data security and data protection
What Should You Do with Your E-Dirham Balance?
The FTA has announced that it will replace the e-dirham with Magnati for all transactions. However, some customers might have some credit left with the e-dirham cards they currently use. The FTA, in an official communication issued to tax agents in Dubai, advises such customers to contact their e-dirham-issuing banks to redeem their e-dirham card balance.
What Does the FTA Say about Payments Made Using GIBAN?
The FTA has stated that the electronic tax payment platform available through the e-Services portal on the FTA website provides various other payment options for its customers while maintaining the highest levels of security, ease of use, and speed. One of these payment options is the Generated International Bank Account Number (GIBAN). The FTA issues the GIBAN to each tax registrant and allows the taxpayers to send direct transfers from their bank accounts to the Authority.
The GIBAN system is used to transfer funds from various UAE-based financial institutions and those from abroad. Taxpayers can use the system to pay Value Added Tax (VAT), Excise Tax, and any other tax obligations. However, it is advisable to consult with tax consultants in Dubai before making any tax-related payments. As per the FTA, taxpayers can settle their tax liabilities using the new platform on top of the FTA’s existing payment methods given below via GIBAN:
- Banks and exchange houses
- Local bank transfers
- International bank transfers
Consult with the Best Tax Agents in Dubai, UAE
The FTA has entered a new era of tax compliance by discontinuing the use of e-dirham in the UAE and replacing it with the smart payment option called Magnati. The advice of tax agents in Dubai such as Jitendra Chartered Accountants (JCA) will come in handy for taxable entities to smoothly transform from the older method to the new payment method. JCA is one of the best tax consultants in Dubai serving clients of a wide range of industries. Our tax agent in Dubai is approved by and registered with the FTA. We can provide robust tax services in Dubai such as tax accounting, tax filing, tax refunds etc. Talk with us if you need any help on any tax-related matters.