First phase of compulsory health insurance cover in Dubai effective from October 31 2014

The Dubai Health Authority’s (DHA) first phase of compulsory health insurance cover effective October 31 will involve approximately 300 companies who employ 1,000 or more employees.

The first of four phases is expected to cover up to 700,000 employees, said authorities on Tuesday,

Non-compliance with the law will result in fines and penalties that will be levied on the erring companies who fail to pay the full cost of basic health insurance for each employee.

DHA Director-General Eisa Al Maidour said on Tuesday that the first phase of the roll-out will have far-reaching effects for workers who will now have basic health care.

“This is a major milestone in ensuring access to health care. This phase of implementation applies to approximately 700,000 employees in Dubai. By mid-2016, everyone in Dubai will have mandatory access to health insurance. So far, we are pleased with the results of the roll out and are thankful to all those employers who have supported us by adhering to the deadline. However, there are still some employers who have not yet met the deadline and we urge them to act promptly.”

The DHA director for Health Funding Dr Haidar Al Yousuf noted that the “legal requirement is for providing the basic insurance package that falls between Dh600-Dh700 annually. However, there are companies that are providing more than the basic package and also providing insurance cover for dependants. It’s a mixed bag,” he said.

Right now, the focus is the insurance cover for the employees. Having insurance cover for the dependants will be covered in Phase 3 of the implementation which falls in 2016. But the responsibility of providing insurance cover for dependants falls on the employee. DHA is working with insurance companies to provide reasonable cover for dependants, according to Dr Yousuf.

Providing information on how the law would be implemented, Al Maidour said that soon the DHA will use direct electronic links with relevant government stakeholders to enforce the law. “Health insurance will be linked to the residency visa in collaboration with the relevant authorities including free zones.”

In other words, no visas will be renewed without a valid insurance cover once the law comes into effect.

Remittance by NRIs to India draws service tax

Remittances by non-resident Indians may become marginally costlier with the Central Board of Excise and Customs clarifying that commission or fee charged by agent based in India from the overseas agent will attract service tax. The apex indirect taxes body has issued a circular to clear the air regarding taxation of remittances and services provided by intermediaries. The board has said no service tax will be payable per se on the amount of foreign currency remitted to India from overseas. However, an Indian bank or other entity acting as an agent to money transfer service operator, facilitating in the delivery of the remittance to the beneficiary in India for a fee will be liable to tax.

The board had issued a circular in July, 2012, after the country switched to negative list regime, wherein it had said there will be no service tax per se on the foreign exchange remitted to India from outside for the reason that money does not constitute a service and that conversion charges or fee levied for sending such money would also not be liable to service tax as the person sending money and the company conducting the remittance are both located outside India.

The latest circular comes after field formations highlighted that foreign money transfer service operators conducting remittances to beneficiaries in India had appointed Indian Banks and financial entities as their agents in India. 

Circular No. 180/06/2014 – ST
F. No 354/105/2012-TRU (Pt.)
Government of India, Ministry of Finance, Department of Revenue
Central Board of Excise and Customs, Tax Research Unit
                                                                                                  Room No 153, North Block, New Delhi
                                                                                                  Dated 14th October, 2014

To
Chief Commissioner of Customs and Central Excise (All)
Chief Commissioner of Central Excise & Service Tax (All)
Director General of Service Tax
Director General of Central Excise Intelligence
Director General of Audit
Commissioner of Customs and Central Excise (All)
Commissioner of Central Excise and Service Tax (All)
Commissioner of Service Tax (All)
Madam/Sir,
Subject: -  Levy of service tax on activities involved in relation to inward remittances from abroad to beneficiaries in India through MTSOs- reg.
 
            Vide circular No. 163/14/2012–ST, dated 10th July, 2012, on the issue of  levy of service tax on the activities involved in the inward remittance it was clarified that there is no service tax per se on the  foreign exchange remitted  to India from outside for the reason that money does not constitute a service and that conversion charges or fee levied for sending such money would also not be liable to service tax as the person sending money and the company conducting the remittance  are both located outside India. It was also clarified that the Indian bank or financial institution who provides service to the foreign bank or any other entity is not liable to service tax as the place of provision of service shall be the location of the recipient of service. This clarification covers the scenario where the Indian bank or financial institution provides services on principal to principal basis to the foreign bank/entity, on its own account, and thus the service is covered by the general rule, i.e. rule 3 of the Place of Provision of Service Rules, 2012.

2.         However, subsequently, it had been brought to the notice of the Board that the foreign money transfer service operator (MTSO), conducting remittances to beneficiaries in India, have appointed Indian Banks/financial entities as their agents in India who provide agency /representation service to such MTSO for furtherance of their service to a beneficiary in India. The agents are paid a commission or fee by the MTSO for their services. The entire sequence of transactions in remittances of money from overseas through the MTSO route is as under:

Step 1: Remitter located outside India (say ‘A’) approaches a Money Transfer Service Operator (MTSO)/bank (say B) located outside India for remitting the money to a beneficiary in India; ‘B’ charges a fee from ‘A’.

Step 2:  ‘B’ avails the services of an Indian entity (agent) (say ‘C’) for delivery of money to the ultimate recipient of money in India (say ‘E’);  ‘C’ is paid a commission/fee by ‘B’.

Step 3: ‘C’ may avail service of a sub-agent (D). ‘D’ charges fee/commission from ‘C’.

Step 4: ‘C’ or ‘D’, as the case may be, delivers the money to ‘E’ and may charge a fee from ‘E’.

 3.         Clarifications have been sought as to whether such agents (referred in Step 2 above) would fall in the category of intermediary, and if so, whether service tax would be leviable on the commission/fee amount charged by such agents. Clarifications have also been sought as to whether the services provided by sub agent (referred in step 3 & 4 above) are leviable to service tax and on certain other related issues.

4.         The issues discussed above have been examined and it is clarified as follows,-

1
Whether service tax is payable on remittance received in India from abroad?
 No service tax is payable per se on the amount of foreign currency remitted to India from overseas. As the remittance comprises money, it does not in itself constitute any service in terms of the definition of ‘service’ as contained in clause (44) of section 65B of the Finance Act 1994.
2
Whether the service of an agent or the representation service provided by an Indian entity/ bank to a foreign money transfer service operator (MTSO) in relation to money transfer falls in the category of intermediary service?  

Yes. The Indian bank or other entity acting as an agent to MTSO in relation to money transfer, facilitates in the delivery of the remittance to the beneficiary in India. In performing this service, the Indian Bank/entity facilitates the provision of Money transfer Service by the MTSO to a beneficiary in India.  For their service, agent receives commission or fee. Hence, the agent falls in the category of intermediary as defined in rule 2(f) of the Place of Provision of Service Rules, 2012.
3  
Whether service tax is leviable on the service provided, as mentioned in point 2 above, by an intermediary/agent located in India (in taxable territory) to MTSOs located outside India?
   Service provided by an intermediary is covered by rule 9 (c) of the Place of Provision of Service Rules, 2012. As per this rule, the place of provision of service is the location of service provider. Hence, service provided by an agent, located in India (in taxable territory), to MTSO is liable to service tax.

The value of intermediary service provided by the agent to MTSO is the commission or fee or any similar amount, by whatever name called, received by it from MTSO and service tax is payable on such commission or fee.
4.
 Whether service tax would apply on the amount charged separately, if any, by the Indian bank/entity/agent/sub-agent from the person who receives remittance in the taxable territory, for the service provided by such Indian bank/entity/agent/sub-agent
    Yes. As the service is provided by Indian bank/entity/agent/sub-agent to a person located in taxable territory, the Place of Provision is in the taxable territory. Therefore, service tax is payable on amount charged separately, if any.
5.
 Whether service tax would apply on the services provided by way of currency conversion by a bank /entity located in India (in the taxable territory) to the recipient of remittance in India?
 
Any activity of money changing comprises an independent taxable activity. Therefore, service tax applies on currency conversion in such cases in terms of the Service Tax (Determination of Value) Rules. Service provider has an option to pay service tax at prescribed rates in terms of Rule 6(7B) of the Service Tax Rules 1994.
6.
  Whether services provided by sub-agents to such Indian Bank/entity located in the taxable territory in relation to money transfer is leviable to service tax?
  Sub-agents also fall in the category of intermediary. Therefore, service tax is payable on commission received by sub-agents from Indian bank/entity.

 5.         Accordingly, Circular No. 163/14/2012-ST, dated 10.7.2012 stands superceded.

6.         Trade Notice/Public Notice may be issued accordingly.

 7.        Please acknowledge the receipt of this circular. Hindi version to follow.


Yours sincerely,
                                                                                                (Dr. Abhishek Chandra Gupta)

Technical Officer, TRU

Tel: 011-2309 2037

Short-term UAE visit visa via smartphone

The Ministry of Interior (MoI) has launched three new procedural services via smartphones, which include issuance of short-term visit visas (for 30 days), renewal of citizens’ passports, and issuance of Certificates of Good Conduct (Criminal Status Certificates).

The new services are launched under the slogan 'One Application... Multiple Services' and embody the UAE Smart Government initiative.

Major-General Dr Ahmed Nasser Al Raisi, Head of the e-Services and Smart Applications Team at the MoI, explained that the new short-term visa issuance service saves time for citizens and residents alike, and enables individuals to apply for a 30-day visa through their smartphones, without the hassle of visiting the General Directorate of Residency and Foreign Affairs at the Naturalisation Residency and Port Sector.

Once the visa is issued, it will be delivered to the applicants via accredited entities designated by the MoI.

He also noted that the Civil Defense informatics services provide individuals and institutions with the necessary information about compliance certificates, as well as executive approvals for architectural, gas, and decoration.

More new services

Maj-Gen Dr Al Raisi announced that the MoI is planning to launch a new bundle of services for Traffic, Naturalisation, Residency, and Civil Defense sectors; as well as other services in the upcoming period via the UAE - MoI smartphones apps.

“The MoI has already initiated the necessary executive procedures to expand these services and make them accessible to all citizens and residents,” he said.

Maj-Gen Dr Al Raisi said, “A Smart Application Centre was established at the Ministry of Interior. It is operated by a highly qualified team of Emirati citizens, to handle all electronic procedures pertaining to these services, and respond to customers’ inquiries via the call center on 8005000.”

He also noted that to date 205,000 individuals are using the applications that the MoI has launched early this year, with an average 54,000 uses per day. While the number of subscribers via the Emirates ID card amounts to 62,000 users.

MoI platform supports Apple, Android, BlackBerry and Windows compatible smartphones.

It provides an electronic link with a number of partners in the UAE, car inspection and insurance companies; as well as an integrated comprehensive link to the ministry’s website, through the unified login mechanism (username and password) to obtain services from any channel of electronic communication.

Users can register once using the single sign-in feature on the website or through smartphones, and gain access to all of the MoI’s services.

20 second immigration clearence at all UAE airports within few months

 The smart gates now available at Dubai International Airport and Abu Dhabi Airport provide residents as well as visitors easy passing through the immigration formalities in 20 seconds approximately.

Registration for the e-Gate is required and it will save the details of the traveller in the system. Currently, registration in Dubai only provides access at Dubai’s airport, and registration in Abu Dhabi only to the airport in the capital.

This is soon to change, explained Saif Al Mazrouei of the General Directorate of Residency and Foreigners Affairs (GDRFA) at Gitex Technology Week.

“All e-Gates will be unified and all airports will work together, so an e-Gate user will only be required to register once.”

Currently e-Gate registration is available free-of-charge at the airports where the technology is available, at GDRFA service centers and at Dnata offices. The applicant needs to be able to present a valid passport and residency visa.

Once registered, the long queues at the immigration desk of the airport can be skipped, and the traveller can head directly to the e-Gate. Here, he will first be asked to present the passport, after which a first gate opens.

An eye scan will verify whether the person is indeed the same as the passport holder, and the passport validity will be checked. When both verifications are successful, the second gate will open and the process will be complete.

The current system is an updated version of the older e-Gate system, which required passengers to present an e-Gate card that had to be purchased.

Although the old e-Gate system was available at all airports, the new technology was only recently introduced as a trial basis, and will be expanded to all airports before the year-end.

Within the next couple of months, the latest e-Gate technology will become available at all airports in the country. Once a person has registered as an e-Gate user, this will provide access to e-Gates of all airports in the UAE.

Dh20,000 fine for 'visa trading' firms in UAE

Companies involved in visa trading without any other business will be fined Dh20,000 in line with a federal cabinet decision that was enforced in August.

The penalty could reach Dh50,000 in case the company repeated that offence within a year, according to the new decision issued by the Dubai-based daily Al Bayan.

It said the decision is intended to crack down on “fake” companies which are registered in the UAE but are not involved in any business except trading in visas for expatriates.

“This is a very serious phenomenon as it gives rise to illegal migrants at a time when the country is locked in a drive to end anarchy and ensure stability,” the paper said, quoted an official at the ministry of interior.