VAT Update: Amendments Federal Tax Authority Procedures

November 7, 2021 / Haroon Juma / VAT & Tax Blog

vat update

The UAE Cabinet has issued Federal Decree-Law No. 28 of 2021 dated 16 September 2021, specifically amending the Federal Decree-Law on Tax Procedures No. 7 of 2017 issued 11 June 2017

Under this amendment, the new amendments introduce a series of developments and enhancement plans for tax legislation and procedures. These changes are designed to manage objections to the authority’s decisions.

Through extending objection periods for individuals, and improving the efficiency of the system, they are implemented to increase taxpayers’ confidence and support taxpayers with easier and transparent procedures.

This amendment increases the time limits for filing tax applications/ objections and softens the requirement to pre-deposit only tax amounts for filing objections before Tax Dispute Resolution Committee.

Also, 50% of penalties at the time of appeal before the Competent Courts will significantly ease the tax disputes procedures of the UAE taxpayers.

Effective date

These summarized amendments are effective from 1 November 2021.

Summary of changes

The amendments effective from 1 November 2021 set out the below key changes:

1. The time limits have been extended for filing reconsideration applications, objections to the Federal Tax Authorities, Tax Dispute Resolution Committee, and appeals before Competent Courts from 20 to 40 business days.

2. The FTA review period to any reconsideration request and issue its decision is extended to 40 from 20 business days from the date of receiving the applications. The FTA should inform the applicant of a decision within 5 business days from the date of issuance of the decision. In addition, the FTA will have to explicitly state its rationale supporting such a decision.

3. An Objection before Tax Dispute Resolution Committee will not be accepted if it is not filed within 40 business days from the date of being notified of reconsideration.

4. When filing an objection before Tax Dispute Resolution Committee, only the tax amount should be deposited for the case to be accepted. This supersedes the previous requirement for tax and penalties.

5. The final decisions by the Tax Dispute Resolution Committee of any disputes exceeding 100,000 Dirhams should be considered final if they were not appealed before the Competent Court within 40 instead of previously 20 business days from the date of notification of the outcome.

6. A new section has been inserted to state an alternative mechanism of objection and appeal to be adopted if the parties to the dispute are any of the Federal or Local Government entities.

7. As a prerequisite for filing an appeal before Competent Court, a minimum of 50% of penalties (or as may be decided by the Competent Courts), is to be paid either by way of cash transfer or bank guarantee.

8. Requested for waiver, refund, and payment in instalments of administrative penalties are to be reviewed and approved by a special committee superseding the FTA. The separate decision by the Chairman of the Board of the FTA shall detail the specifics on the formation of the committee, its by laws, and the manner of holding meetings for such cases.

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