UAE Federal Tax Authority: Refund Policy for Private Clarification Requests

September 18, 2024

The UAE Federal Tax Authority (FTA) issued Decision No. 5 of 2024 on July 19, 2024. The decision, effective from August 1, 2024, sets out the conditions under which fees paid for private clarification requests will be refunded.

Key Provisions of the Decision

The decision outlines specific circumstances under which the FTA will refund fees for private clarification requests:

Withdrawal of request Within Two Days: If the applicant withdraws their private clarification request within two business days of submission, they will be eligible for a refund.
Persons not registered under the Corporate Tax: Private Clarification Requests submitted by individuals or entities not registered under the corporate tax and requests are not related to the inquiry about tax registration.
Tax Audits: Applicants undergoing a tax audit at the time of submitting the private clarification request will receive a refund.
Post-Decision Procedures: Private clarification requests are related to the decision issued by the FTA after submitting the request.
Duplicate Requests: If the duplicate private clarification request is submitted by the same applicant on the same subject, the fee will be refunded.
Legislative Review: If the private clarification requests are related to the subjects under review for legislative amendment in coordination with the Ministry of Finance (MoF) will qualify for refunds.

Refund Process

Refunds will be processed based on the nature and scope of the private clarification request:

Full Refund: If the FTA decides not to issue a clarification for a request covering one or more taxes, the entire fee will be refunded.

Partial Refund: For requests involving multiple taxes where a clarification is issued for only one tax, a partial refund will be given. The refunded amount will be the difference between the fee for a single tax clarification and the fee for multiple tax clarifications.

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Positive Implications of the Policy

This refund policy has several positive effects:

Encouraging Proactive Guidance Seeking: By reducing the financial risk associated with seeking private clarifications, more taxpayers may actively seek guidance on complex tax issues. This can lead to better compliance and fewer errors in tax filings.

Enhancing Trust and Cooperation: Providing clear guidelines and fair treatment helps to build trust and cooperation between taxpayers and the FTA. This can lead to smoother tax administration and more effective dispute resolution.

Supporting SMEs: Small and Medium Enterprises (SMEs), which often have limited resources, will benefit significantly from this policy. It makes obtaining clarifications easier and less costly, ensuring that SMEs meet their tax obligations correctly without incurring excessive expenses.

Improving Request Quality: With clearer guidelines and the possibility of refunds, taxpayers are more likely to submit accurate and complete requests. This diligence reduces the administrative burden on the FTA in processing and responding to requests.

Conclusion

The UAE FTA’s new refund policy for private clarification requests offers taxpayers several benefits. By providing refunds under specific conditions, the policy aims to reduce financial risks and encourage proactive guidance seeking. The policy enhances trust between taxpayers and the FTA, fostering a better quality in clarification requests and supporting efficient tax administration.