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As a business operating in the UAE, understanding the latest updates in tax legislation is crucial for ensuring compliance and avoiding costly disputes. The introduction of Federal Decree-Law No. 28 of 2022 on Tax Procedures provides businesses with a structured, pre-emptive mechanism to request a review of their tax assessments and related penalties, potentially resolving issues before escalating to formal reconsideration.
In this post, I’ll unpack the implications of this new tax review mechanism and offer guidance on how businesses can approach it strategically.
Key Features of the New Tax Assessment Review Mechanism
To begin, let’s take a look at the core aspects of the tax assessment review process:
| Feature | Details |
|---|---|
| Eligibility for Review | Based on specific errors such as misapplication of tax laws, calculation mistakes, or procedural lapses during audits. |
| Deadline for Filing Request | Must be submitted within 40 business days from the date of assessment notification. |
| FTA Review Decision Timeline | The FTA aims to issue a decision within 40 business days, with the option to extend if needed. |
| Further Action | If unsatisfied with the review outcome, businesses can submit a reconsideration request with new evidence. |
| Submission Method | Review requests are to be sent via email to: AssessmentReview@tax.gov.ae |
Understanding What This Means for Businesses
The introduction of this review process presents businesses with an opportunity to resolve potential issues directly with the FTA, possibly reducing legal and compliance costs. However, taking advantage of this option requires proactive compliance, accurate documentation, and a clear understanding of the eligible grounds for a review. Here are some critical points to consider.
1. Opportunities for Cost Efficiency and Compliance
Businesses seeking reliable corporate tax advisors UAE should adopt a proactive approach to tax planning and compliance to minimise regulatory risks and improve operational efficiency.
The review mechanism offers a way to address disputes without formal litigation, potentially lowering costs and speeding up resolutions. However, I encourage businesses to act swiftly and thoroughly to capitalize on this process.
2. Specified Grounds for Review Requests
The law defines specific types of errors that may qualify for a review request. Here’s a look at some common grounds:
| Ground for Review | Example |
|---|---|
| Misapplication of Tax Law | Incorrect rates or tax treaty applications |
| Calculation Errors | Mistakes in computing VAT or excise amounts |
| Procedural Lapses in Audits | Issuing assessments without prior notification or incomplete audit processes |
| Incorrect Estimation Bases | Use of inaccurate external confirmations for determining taxable supplies |
| Absence of Audit Findings Notification | Audit results not delivered to the registered address |
These clearly defined grounds can help you self-assess whether an issue qualifies for a review. Additionally, the statute of limitations offers valuable clarity by restricting audits to within five years of the tax period’s end.
3. Timeline Awareness and Adherence
It’s essential to file a review request within 40 business days of the assessment notification date. Missing this window could necessitate a formal reconsideration request, a more stringent and often costlier process. Below is a summary of key deadlines to keep in mind:
| Process | Timeframe |
|---|---|
| Review Request Submission | Within 40 business days of receiving the tax assessment notification |
| FTA Review Decision Timeline | Within 40 business days of request receipt (extendable with notice) |
| Potential Reconsideration Request | Can be filed if the review outcome is unsatisfactory, with new evidence allowed |
How to Approach the Review Process
While the option to request a review is an important tool, ensuring that your business has accurate and up-to-date records, strong internal controls, and clear documentation can make all the difference in managing tax reviews effectively.
Here’s a practical approach to consider:
-
- Preemptive Compliance Checks
I recommend conducting regular internal audits to ensure alignment with current tax regulations. A preemptive compliance review can identify any potential discrepancies early on, reducing risks in case of an audit. Common areas to review include VAT calculations, excise tax inventory, and documentation of taxable supplies. - Maintain Comprehensive Documentation
Accurate records are essential for a successful review request. In my experience, a well-documented trail of all transactions and communications with the FTA can greatly enhance your position in the event of a dispute. This also helps streamline the review process by providing the FTA with clear, organized evidence to support your case.
- Preemptive Compliance Checks
| Key Documentation Areas | |
|---|---|
| Audit Notifications | Confirm timely receipt and retention of FTA notifications |
| VAT and Excise Calculations | Maintain detailed records to verify calculations |
| External Confirmations | Document any third-party confirmations that could impact taxable values |
- Act Promptly and Monitor Deadlines
Given the strict deadlines in place, I advise closely monitoring timelines for review requests and FTA responses. Acting within the specified 40 business days ensures your opportunity to address issues directly with the FTA.
- Tailor Your Strategy to Industry-Specific Risks
Different industries face unique tax compliance challenges. For instance:
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- Retail and FMCG: Excise tax inventory may be a focal point.
- Financial Services: Proper treatment of taxable financial supplies is crucial.
- Manufacturing: Detailed tracking of supply values for VAT purposes is necessary.
By focusing on these specific areas, you can reduce the likelihood of issues arising and streamline the review process if disputes do occur.
Navigating these recent tax changes can be complex, and the review mechanism is designed to make compliance more manageable. However, staying proactive with compliance and understanding your options under the new review mechanism can save significant time and resources.
Contact N R Doshi & Partners for Expert Tax Advisory
Working with an experienced FTA-registered tax agent UAE can help businesses manage tax assessments, review requests, and FTA compliance procedures with greater accuracy and confidence.
The team at N R Doshi & Partners is here to help you interpret these regulations, assess your eligibility for review requests, and support you in preparing thorough and accurate documentation. If you’re navigating a tax dispute or simply want to strengthen your compliance, reach out to us today.
Let us help you manage your tax obligations effectively, ensuring you stay compliant and avoid unnecessary disputes.
