Money remittance outflows will be exempt from the planned Value Added Tax (VAT) which will take effect on the January 1 in the United Arab Emirates.
“The five per cent VAT tax would be levied on the remittance service fees, rather than the remittances themselves,” said UAE Federal Tax Authority (FTA) director-general Khalid Al Bustani.
Foreign Exchange and Remittance Group chairman Mohammed Al Ansari expected the rise in remittance services fees to range between 50 fils and AED1.5.
In a statement to Emarat Al Youm, he said that the planned increase of service fees due to the VAT will have a slight impact and will not affect the remittance outflows.
He said that exchange companies in the UAE would not increase remittance fees when the 5pc VAT takes effect in January 2018.
According to Mr Al Ansari, the UAE tops all other GCC countries in the overall volume of remittance outflows, based on Swift Group, the leading provider of financial messaging services.
The UAE Central Bank also said that expatriate workers’ remittances outflows topped AED40.8 billion during the second quarter of 2017.