UAE Law Amendments to Federal Tax Procedures Law
As of 1st November 2021, the Federal Tax Authority (FTA) of the UAE will initiate the administration of the new formal procedures that have been set to ease the processes involved for registered taxpayers applying for requests for reconsiderations and objections to the decisions made by the FTA, for the execution of decisions made by the Tax Dispute Resolution Committee (TDRC), initiating appeals, reduction of penalties imposed by the administration and the payment of the same by way of installments and its exemptions. By way of its Cabinet of Ministers, the UAE Government has issued the new Federal Decree-Law No. 28 of 2021 in its efforts to amend the previous Law on Tax procedures involved in managing the various tax disputes and resolutions within the country, namely the Federal Decree-Law No. 7 of 2017.
The New Law has facilitated the extensions of timelines concerning disputes and decisions made by the FTA and created a framework for specifying the timeframe for FTA decisions to be issued in these disputes. The new decree-law has also introduced various other amendments for Tax Procedures within the country.
With the implementation of the New Law, the FTA will ensure that registered taxpayers will be enabled to submit requests to the FTA to reconsider any of the decisions that have been formally issued by it, ensuring that their obligations are met with adherence to the conditions specified in the New Amendment Law which includes the submission of the request to be done within 40 working days from the date the decision has been duly notified. Further, the request must be considered for reconsideration by the FTA within 40 working days from the date of the request and subsequently announced to the applicable taxpayer within five working days from the date the FTA has newly issued the decision. Under the New Law, objections can be submitted before the Tax Dispute Resolution Committee (TDRC) by the respective individuals within 40 working days from receipt of the FTA's decision. Respectively, only the tax payments need to be settled by individuals to be admitted to submitting objections. The penalty concerning the complaint is not considered during this period.
There are certain exceptions when courts need not take up appeals when the specific procedures are not adhered to by applicants. These include the non-fulfillment of providing enough evidence that payment of a minimum of 50% of the total value of penalty has been paid by the tax-paying registrants through either cash or bank guarantee to the respective authority. The New Law includes various important key provisions and amendments to the existing Law.
Submission of Objections and respective procedures under Article 30
Submission of objections concerning FTA's decisions needs to be done within 40 working days from when the new decision has been notified to the applicants. These objections may not be taken under the following conditions: when such submission for reconsideration has not been placed to the FTA, when tax payment concerning the specific objection has not been made, if such an objection has not been submitted within 40 days from the receipt of notification of the decision as mentioned above.
Execution of TDRC Decisions under Article 32
A writ of execution may be considered for tax disputes handled by the Committee with a maximum value of AED 100,000. Writs of execution may also be considered when the value of the dispute exceeds AED 100,000 when they are not challenged in the Court within 40 working days after the notification has been sent regarding the decision made in the said objection submission. Federal Law No. (11) of 1992 will be the leading Law regarding the implementation of decisions of the TDRC concerning the writ of execution cases by the execution judge of the respective Court.
Approach for Objection and Appeal under Article 32 bis
This section provides certain exceptions for the procedure used to decide disputes concerning parties associated with the federal or local government authority as per the Minister's directions to use a different mechanism from the provisions established in Articles 29, 30, 31, 32, and 33. Until the Minister makes such particular recommendations, the Law concerning tax disputes and resolutions concerning objections and appeals will be uniformly administered for federal and local government authorities.
The mechanism for Appeals under Article 33
Appeals for decisions made by the TDRC may be submitted to the respective Court by the concerned parties or the FTA within 40 working days from the notification of the said decision by the Committee when there is an event of an objection of the decision of the TDRC or when there is no decision already made by the Committee in light of the said objection. The Law also establishes those situations and cases wherein the respective Court will not consider the appeal against FTA. These would include cases wherein the specific objection is impermissible by way of Clause (2) of Article 30, when required evidence concerning tax payment made to the FTA by of the TDRC's decision or Court judgment is not provided and when required evidence is not provided for payment of a minimum of 50% of the value of penalties advanced to the party by way of the decision provided by either TDRC or the respective Court in cash or bank guarantee. The minimum percentage prescribed here may be altered by a recommendation made by the Minister as provided under Clause (2) paragraph (C) of Article 33.
Controls concerning Administrative Penalties under Article 46
In situations wherein payment of administrative penalty has been made or has been imposed on the party involved for violations of the provisions of the new decree-law or the tax procedures law, the TDRC can, under Article 46, consider the payments of penalties to be paid by way of installments or exempt or refund the payment completely by way of special recommendations made by the Director-General. This will be done by adhering to the decisions made by the Council of Ministers based on the directions of the Minister. The Committee concerning these decisions will be instituted by a decision made by the Chairman of the Board of Directors of the FTA. Either the Chairman of the Board will be the Chairman of the Committee or his respective deputy with two other members of the Board of Directors. This decision will also involve the various procedures and conduct to be established within the said Committee.
This new development in the Law shows the UAE's efforts in considering and facilitating the needs and requirements of the people to further boom into a more excellent economy by attracting more investment and increasing development within the country. The Government is continuously issuing amendments in the Law concerning Tax disputes and resolutions to establish a smoother process for attaining settlement of these disputes. The new laws continue to be used by Courts in cases already in conflict and those arising subsequently. The latest development in the Law encourages registered taxpayers to strictly consider and abide by the respective provisions in the New Law. It enables individuals to carefully examine and evaluate the various requirements before applying for tax disputes or challenges before the Committee or competent Courts. The New Law will potentially ease the area concerning Tax disputes and resolutions within the country.