Amendments in UAE Tax Laws 2021

tax procedure law

The Federal Tax Authority (FTA) has amended the provisions of the Federal Decree-Law No. 7 of 2017 on tax procedure law. The UAE cabinet has introduced the Federal Decree-Law No. 8 of 2021 to facilitate dispute resolutions related to taxes in the UAE.

These changes have already been implemented and are applicable as of 1st November 2021.

The new tax law essentially extends the timeline for tax registrants to resolve their disputes regarding FTA decisions. Therefore, it gives taxpayers ease and reasonable time to submit reconsideration requests. FTA has also smoothened the requirement criteria for submitting appeal procedures and objections.

We have broken down the key elements of the tax law’s amendment into simple parts for everyone to understand. Let’s walk through each of them one by one.


The extension of the timeline

The FTA has relaxed the Tax Procedures Law for taxpayers to deal with tax disputes with ease and clarity through the amendment of Articles 27, 30, and 33.

Submitting the reconsideration application (Article 27)

Under the new tax law, taxpayers have an extension in the timeline to submit their reconsideration requests for up to 40 business days compared to the previous timeline of 20 business days.

The timeline for FTA to review and make the final decision on reconsideration appeals and tax disputes has also been extended up to 40 business days compared to the previous timeline of 20 business days.

Appeal procedures and conditions of inadmissible cases (Article 30)

Suppose a taxpayer wants to submit an objection to the decision issued by FTA. In that case, they can appeal to the Tax Disputes and Resolution Committee (TDRC) with an extended timeline of 40 business days compared to the previous timeline of 20 business days.

Challenge procedures (Article 33)

The new decree-law extends the timeline up to 40 business days compared to the previous timeline of 20 days to appeal the decision made by TDRC before the court.


Requirement criteria for objections and appeals

The amendments of Articles 30 and 33 are as follows

Objection to the committee (Article 30)

According to the new tax law, taxes and penalties have been changed to the settlement of taxes only. The government has excluded the settlement of penalties while submitting an objection to the FTA decision.

Appeals to the competent court (Article 33)

A clause in Article 33 dictates the terms of the appeal. These terms are as follows.

  • Existence of inadmissible cases to submit an objection to the Tax Dispute and Resolution Committee
  • If a taxpayer fails to provide valid proof of taxes to the FTA
  • If a taxpayer fails to provide valid payment proof of no less than 50% of the administrative penalty amount. (By cash or bank payment to FTA)

Enforcement of the TDRC decision (Article 32)

The amendment of Article 32 is as follows:

Suppose TDRC issued the decision on disputes exceeding 100,000 AED. In such a scenario, it should be considered exclusionary elements if not appealed before the competent court within 40 business days of the verdict compared to the previous timeline of 20 business days.

If the parties happen to be federal or local government bodies, the cabinet shall adopt an alternative mechanism of appeal to issue a decision. The current mechanism (Article 32 (bis)) will apply until then.


Special Weaver Committee (Article 46)

The amendment to Article 46 is as follows:

The Special Weaver Committee is also equipped with special powers to approve the penalty installments or refund the amount. Moreover, it is as per the minister’s controls and procedures (of a cabinet decision).

Furthermore, article 46 of the tax law clearly defines the committee’s structure. The Chairman of the FTA board forms and heads the committee along with his deputy with two board members.

Reception

The amended tax law, aka tax procedure law, is already issued as of 1st November 2021. Please note that any decision made before the amendments shall follow the previous Tax Procedure Law.

Taxpayers and businesses overwhelmingly welcome the new changes because they give them more time to resolve disputes. It gives them a sense of satisfaction and solidifies their trust even more in the system.

They would also ensure that they do not miss out on any possibility they can have to turn the dispute in their favor. The latest amendments offer more flexibility and fair opportunity to settle penalties and taxes in the UAE. As per the new tax law amendments, they only have to pay tax to submit an objection to TDRC and 50% of administrative penalties (by cash or bank guarantee) to file an appeal before the competent court.


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