Overview on Resolving Tax Disputes in UAE

The complexities of UAE VAT regime and the Federal Tax Authority or FTA’s current targeting for tax evasion and avoidance means tax disputes are increasingly arising. There will be instances wherein you disagree with an assessment or decision that is made by the local tax authority. If you are in complete disagreement with a certain decision, you have the option of asking for it to undergo a review by the FTA. You can also the right in appealing to the decision with the UAE court system.

UAE VAT Reconsideration

The Federal tax Authority offers 20 days to registered businesses to submit an application for VAT reconsideration or appeal. If you’ve been affected by the COVID-19 pandemic, the FTA offers extra weeks to appeal decisions. It is advised to send an appeal as quickly as possible. Applicable provisions on VAT reconsideration are as follows:

• Any taxable entity in UAE registered for VAT may submit to the Authority a request for VAT reconsideration for any decision that is issued to it, either in part or as a whole, provided that reasons will be included, not longer than twenty days from being notified of FTA’s decision.
• UAE tax authority shall process the request for reconsideration and review the decision if the taxable entity has fulfilled all the requirements. It will issue a justified decision not more than twenty-five days from receiving the application for an appeal. The Authority will inform an applicant regarding its decision.

If a taxable entity has missed the 20 business days deadline for submitting an appeal to the FTA on time, it may still make an appeal provided that it can convince the Tax Dispute Resolution Committee of the FTA to allow for a late appeal. It will involve a consideration of reasons provided for lateness and it’s by no means a guarantee that a late filing of an appeal will be approved. Read more about Tax Disputes.

Benefits of submitting VAT reconsideration application to FTA:

• The FTA has twenty-five business days or longer to provide a review, giving the taxable entity in considering the strength of the case. This means it is able to potentially narrow a disputed matter and bolster its arguments.
• There’s always the possibility for the disputed matter to be resolved in favor of the taxable entity without the expense, hassle, and uncertainty that are born out of tax litigation with the courts.
• While a decision issued by the FTA is reviewed, disputed tax will be postponed or held although interest rates will continue in accruing unless a payment notice is issued by the FTA with respect to the dispute tax.

A taxable entity for the purpose of VAT in UAE has the right in appealing against decisions of the FTA including the following:

• Assessment in paying VAT
• Determination of VAT rate that’s chargeable
• Determination that activities are exempt activities
• A charge in connection to an issue of incorrect invoices or VAT invoice by an entity that isn’t VAT-registered
• Compulsory group registration, cancellation of a group registration, and refusal in allowing group registration
• Determination of an open market value on certain supplies in between connected taxable entities
• Refusal by the FTA to authorize entity in operating as an agent for refunding for retail export
• Treatment of taxable entity where supplies are allowed in being made on land, occupied, owned or controlled by it wherein such land is severally or jointly liable with other taxable entities
• Charge to tax according to regulations
• Refusal by the FTA regarding a claim for VAT repayment
• Refusal by the FTA to accept authenticity of expression of doubt

Filing an objection with UAE Tax Dispute Resolution Committee

You may still be in disagreement to the decision of the FTA even after a review or request for VAT reconsideration. In such case, you can ask the UAE Tax Disputes Resolution Committee or TDRC in hearing your appeal. Your appointed regulated tax agent in Dubai must do so within twenty days from the issuance of the FTA’s review decision.

To submit your objection to the TDRC, the following documents must be submitted:

• Duly completed objection form (Arabic and English)
• Explanatory memorandum of objection in Arabic
• Supporting documents including evidence of original decision of FTA and application for reconsideration (supporting documents can also include receipts of payments for tax penalties and liabilities subject to the decision of the FTA; documents must be in Arabic).

Regulated tax agents in Dubai

It is strongly advised to seek the help of VAT specialists like Farahat & Co. that are experienced in administrative disputes in UAE and managing tax matters. To date, we’ve seen positive outcomes for taxable entities in relation to mitigation of tax liabilities with the help of a team of seasoned tax professionals in UAE.

****

Disclaimer: The contents of this article are for information purposes only and do not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up.  The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that Author / TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.