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 tax dispute resolutions.
These changes have already been implemented and is applicable as of 1st November 2021.
The new law essentially extends the timeline for tax registrants to resolve their disputes regarding the decisions by FTA. Therefore it gives taxpayers ease and a reasonable amount of 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 amendment into simple parts for your easy understanding. 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 procedure law, taxpayers have an extension in the timeline to submit their reconsideration requests 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 appeal 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)
If a taxpayer wants to submit an objection to the decision issued by FTA, he/she 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 Procedure Law, the settlement of taxes and penalties has 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 Tax Dispute and Resolution Committee
- If a taxpayer fails to provide valid proof of taxes to 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:
If TDRC issued the decision on disputes exceeding 100,000 AED, it shall be considered as 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 be applied until then.
Special Weaver Committee (Article 46)
The amendment to Article 46 is as follows:
The Special Weaver Committee is now also equipped with special powers to approve the penalty installments or refund the amount. Moreover, it is in accordance with the controls and procedures (of a cabinet decision) issued by the minister.
Furthermore, article 46 of Tax Procedure Law clearly defines the structure of the committee. The Chairman of the FTA board forms and heads the committee along with his deputy with two board members.
The amended Tax Procedure Law is already in effect 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 for the settlement of taxes and penalties where they only have to pay taxes to submit an objection to TDRC and 50% of administrative penalties (by cash or bank guarantee) to file an appeal before the competent court.