Tax disputes in the UAE have witnessed an upsurge as a result of the intricate nature of the VAT regime and the Federal Tax Authority’s (FTA) vigilant efforts to combat tax evasion and avoidance. It is not uncommon for individuals or businesses to find themselves at odds with an official decision or assessment issued by the FTA. In such cases, the option of requesting reconsideration from the FTA or pursuing an objection through the UAE tax dispute system may become available.
VAT Reconsideration Application
To initiate the process, a person affected by an official FTA decision can submit a VAT reconsideration application within a specified timeframe of 40 business days. The provisions pertaining to VAT reconsideration are as follows:
Any person can request reconsideration from the FTA for an official decision that has been issued against them, either partially or in its entirety. The request must include well-founded factual and legal reasons and must be submitted within 40 business days from the date of receiving notification of the FTA’s decision.
Upon receiving a completed reconsideration application, the FTA will review the request and issue a reasoned decision within 40 business days. The applicant must then be notified within five business days from the date the decision is issued. The current FTA service information therefore states that the Authority may take up to 45 business days to respond from the date it receives the completed request, and the decision period may be extended.
If a person fails to meet the 40-business-day deadline for submitting a reconsideration request, a separate request to extend the deadline may be available in accordance with the applicable FTA procedure. The request must explain and support the reasons for the delay, and approval is not automatic. For more comprehensive details regarding Tax Disputes, it is advisable to refer to the pertinent resources available.
Read more about: Effective Tax Dispute Management and Penalty Avoidance Strategies in UAE
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Benefits of Submitting a VAT reconsideration application to the Federal Tax Authority (FTA)
Submitting a VAT reconsideration application to the UAE’s Federal Tax Authority (FTA) can have several benefits. Here are some of the potential advantages:
- Rectifying Errors: If you believe there was an error in an FTA decision, assessment or VAT calculation, submitting a reconsideration application allows you to present the relevant facts, records and legal grounds. This can help correct an inaccurate tax or penalty position.
- Dispute Resolution: The reconsideration process provides a formal avenue to dispute an official FTA decision. If you disagree with the decision or assessment, submitting an application allows you to present your case before proceeding to the Tax Disputes Resolution Committee.
- Cost Savings: A properly prepared reconsideration request may resolve the matter without the need for further objection or court proceedings. This can reduce the time and costs associated with a prolonged tax dispute.
- Compliance Assurance: The VAT reconsideration process helps a business clarify its position under the UAE’s VAT rules. By addressing the disputed decision and providing the required evidence, the business can better understand and meet its tax obligations.
- Clarity and Transparency: The reconsideration process allows the applicant to set out the disputed facts and legal grounds in a structured manner. Supporting documents can help clarify misunderstandings or discrepancies in the FTA’s decision.
- Legal Protection: Submitting a reconsideration application helps preserve the applicant’s right to challenge an official FTA decision. A reconsideration request is generally required before an objection can be filed with the Tax Disputes Resolution Committee.
Appeal to Tax Disputes Resolution Committee (TDRC)
If you still disagree with the decision made by the FTA after the reconsideration stage, you can submit an objection to the UAE Tax Disputes Resolution Committee (TDRC). Taxpayer objections against FTA decisions can be made under the following conditions:
- Payment of the full tax amount subject to the objection,
- Filing a reconsideration application with the FTA beforehand, and
- Submitting the objection within 40 business days of receiving notification of the FTA’s reconsideration decision.
A taxpayer must file a reconsideration application with the FTA before submitting an objection to the TDRC. The TDRC also has jurisdiction to consider an objection where a reconsideration application was properly submitted but the FTA did not issue a decision within the applicable period. If the total disputed tax and administrative penalties do not exceed AED 100,000, the TDRC’s decision is final and enforceable. Objections are submitted electronically through the Ministry of Justice Tax Dispute System to the competent Tax Disputes Resolution Committee.
Required Documents for filing an objection to TDRC
When filing an objection to the Tax Disputes Resolution Committee (TDRC), it is essential to provide the documents required to support the case effectively. Depending on the dispute and the electronic filing requirements, the applicant should prepare the following:
- Completed Objection Application: Provide the applicant’s personal or business information, contact details, tax registration details, representative information where applicable, and a clear statement identifying the decision being challenged.
- Explanatory Memorandum: Prepare a reasoned memorandum setting out the factual and legal grounds of the objection. Arabic documentation or a legal Arabic translation may be required in accordance with the filing and evidentiary requirements.
- Supporting Documents: Include the relevant FTA decision, the reconsideration application and decision, tax assessments or penalty records, proof of payment of the full tax subject to the objection, and all evidence supporting the objection. Arabic translations should be provided where legally required.
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Trust HHS Lawyers to resolve your VAT/Tax dispute
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