Tax dispute 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 a decision or assessment made by the local tax authority. In such cases, the option of requesting a review from the FTA or pursuing an appeal through the UAE court system becomes available.
VAT Reconsideration Application
To initiate the process, businesses registered for VAT in the UAE can submit a VAT reconsideration application or appeal within a specified timeframe of 20 days. The provisions pertaining to VAT reconsideration are as follows:
Any taxable entity registered for VAT in the UAE can request a reconsideration from the FTA for any decision that has been issued to them, either partially or in its entirety. The request must include well-founded reasons and must be submitted within twenty days from the date of receiving the notification regarding the FTA's decision.
Upon receiving the application for reconsideration, the UAE tax authority will carefully review the request and assess the decision, provided that all the necessary requirements have been fulfilled. Within twenty-five days of receiving the appeal application, the FTA will issue a well-justified decision and duly inform the applicant about it.
In the event that a taxable entity fails to meet the 20-day deadline for submitting an appeal to the FTA, there may still be an opportunity to file a late appeal by persuading the Tax Dispute Resolution Committee of the FTA to accept the late submission. The committee will evaluate the reasons provided for the delay, although it should be noted that approval for a late filing is not guaranteed. For more comprehensive details regarding Tax Disputes, it is advisable to refer to the pertinent resources available.
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 the assessment or calculation of VAT by the FTA, submitting a reconsideration application allows you to rectify those errors. This can help ensure that you are not overpaying or underpaying VAT.
- Dispute Resolution: The reconsideration process provides a formal avenue to resolve disputes with the FTA. If you disagree with their decision or assessment, submitting an application allows you to present your case and potentially reach a resolution.
- Cost Savings: By submitting a reconsideration application, you have the opportunity to correct any inaccuracies or disputes without resorting to formal legal proceedings. This can save you time, effort, and potentially costly legal fees.
- Compliance Assurance: The VAT reconsideration process helps to ensure compliance with the UAE's VAT regulations. By engaging with the FTA and resolving any issues, you can demonstrate your commitment to adhering to the tax laws and maintaining good standing.
- Clarity and Transparency: The reconsideration process allows for a transparent dialogue between you and the FTA. By presenting your case and providing supporting documentation, you can help clarify any misunderstandings or discrepancies, leading to a clearer understanding of your VAT obligations.
- Legal Protection: Submitting a reconsideration application to the FTA helps protect your legal rights. It allows you to formally dispute any decisions or assessments that you believe are incorrect, providing a structured framework to resolve such matters.
Appeal to Tax Disputes Resolution Committee (TDRC)
If you still disagree with the decision made by the FTA (Federal Tax Authority) in the United Arab Emirates, even after a review or request for VAT reconsideration, you have the option to appeal to the UAE Tax Disputes Resolution Committee (TDRC). Taxpayer objections against FTA decisions can be made under the following conditions:
- Settlement of taxes and penalties,
- Filing an application for reconsideration with the FTA, and
- Submitting objections within 20 business days of receiving the FTA decision notification.
A taxpayer must file a reconsideration application with the FTA before submitting an objection to the TDRC. The TDRC has jurisdiction to decide on objections, even if the FTA has not made a decision on the reconsideration application. If the total unpaid tax and penalties do not exceed AED 100,000, the TDRC's decision is final and enforceable. Taxpayers must submit objections to the TDRC jurisdiction corresponding to their registered FTA address. For example, taxpayers registered in Dubai address the Emirate of Dubai TDRC, while those from Abu Dhabi address TDRC Abu Dhabi, and so on for other emirates.
You may want to know: International Tax Lawyer in the UAE: A Key to Resolving Tax Disputes
Required Documents for filing an objection to TDRC
When filing an objection to the Tax Dispute Resolution Committee (TDRC), it is essential to provide the necessary documents to support your case effectively. To initiate the objection process, you will be required to gather and submit the following original documents:
- Completed Objection Form: Prepare a comprehensive objection form in both Arabic and English. The form should include all the essential details, such as your personal or business information, contact details, VAT registration number, and a clear statement of the objection. Make sure to complete the form accurately and legibly.
- Explanatory Memorandum: Draft an explanatory memorandum outlining the grounds for your objection in Arabic. This memorandum serves as a detailed explanation of your disagreement with the FTA's decision.
- Supporting Documents: Include all relevant supporting documents to substantiate your objection. These can consist of evidence related to the original decision made by the FTA and the application for reconsideration that you previously submitted. Additionally, you may include receipts of payments for tax penalties or liabilities that are under dispute. Remember, all supporting documents must be provided in Arabic
Trust HHS Lawyers to resolve your VAT/Tax dispute
Facing a tax dispute in the UAE? HHS Dubai Lawyers is here to help. Our expert team specializes in VAT reconsideration applications, providing professional analysis and representation tailored to your unique circumstances. With a deep understanding of UAE tax laws, we strive for fair treatment and optimal outcomes. Trust HHS Lawyers in Dubai to resolve your VAT dispute effectively and protect your interests.