Litagation Overview Under UAE VAT Federal Decree-Law No. (28) of 2022 on Tax Procedures
Tax Assessment Review Request ( New Optional Mechanism) (TAXP008)
Intention
A Person may submit a request to the Authority to review a Tax Assessment review if the person has reasonable grounds to believe that there were technical errors relating to the incorrect application of the relevant tax legislation or tax treaties, calculations errors or errors in audit procedures that led to an incorrect determination of tax differences and administrative penalties by the FTA.
Time frame
The request is to be made within (40) forty Business Days from the date the Person is notified of the Tax Assessment and the related Administrative Penalties with the specific the reason.
Response
The FTA team has been providing responses to the clarification requests within 40 business days from the date of receiving such requests.
Decision
Mostly, decisions made by the FTA in a Tax Assessment Review request are based on the facts of the case and the applicant is informed of the decision within (5) five Business Days from the date of issuance of the decision
Conclusion
If the clarification decision is not favorable to a taxpayer, he can apply for filing Reconsideration.
*If the person wishes to introduce new information or additional documentary evidence/facts that were not presented to the FTA auditors during the audit process, the tax assessment review mechanism is not the appropriate dispute channel. In such instances, the person may apply for reconsideration
Reconsideration Request
Intention
A Person may submit a request to the Authority to reconsider any decision, or part thereof, issued by the Authority.
Time frame
- The request is to be made within (40) forty Business Days from the date from the date he was notified of decision.
- If an application for review of a Tax Assessment has been submitted to the Federal Tax Authority (FTA), a reconsideration request can only be filed after the FTA issues a decision or after the expiry of the time limit within which the FTA is required to issue a decision and notify the applicant.
Response
The FTA team has been providing responses to the clarification requests within 40 business days from the date of receiving such requests.
Decision
FTA inform the applicant of the decision within (5) five business Days from the date of issuance of the decision.
Conclusion
If the Reconsideration request is not favorable to a taxpayer, he can apply for “TDRC”.
TDRC Mechanism
Time Frame
If the reconsideration decision is not favorable to a tax payer, he can object the same within 40 business days from the date of reconsideration order.
Working mechanism
Taxpayer should file an appeal when he disagrees with FTA’s reconsideration and has good arguments to support his position. TDRC works independently from the FTA, i.e. it falls under the Ministry of Justice.
Payment
Payment of taxes should be made before submission (not penalties anymore)
Response
The Committee shall review the objection submitted and make a decision within (20) twenty Business Days from the receipt of the objection.
Decision
FTA informs the applicant of the decision within (5) five business days from the date of issuance of the decision.
Conclusion
TDRC has the power to cancel FTA’s decision if it is found out that decision passed earlier was not correct.
Appeal Process
Time Frame
If the outcome of TDRC is not favorable to taxpayer he can file an appeal with the Court within 40 business days from the date of TDRC order.
Prerequisites
An appeal can be filed with the Court only when combined tax and penalty amount exceeds AED 100,000.
Who can appeal?
Both taxpayer and FTA can file an appeal with the Court to challenge against decisions laid out by TDRC.
Payment
Payment of taxes and at least 50 % of the prescribed administrative penalty (either through cash payment or bank guarantee in favor of the authority) should be made.
Conclusion
Decision to the appeal can be either ruled out against taxpayer or the FTA after considering all the facts, information available and presented before it.
Timeline Mechanism
Tax Assessment Review Request
It has to be submitted to the FTA within 40 business days from the date the person is notified of the tax assessment and related administrative penalties
Reconsideration
It has to be filed within 40 business days from being notified of the FTA decision.
TDRC
It has to be submitted within 40 business days from the date of reconsideration order.
Appeal
It has to be filed within 40 days from the date of TDRC order.
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