UAE: Amendment of Certain Provisions of the Tax Procedures Law in Relation to Tax Disputes Resolution

The UAE Cabinet issued Federal Decree-Law Number 28 of 2021 to amend the provisions of Federal Decree-Law Number 7 of 2017 regarding tax procedures related to tax disputes and their settlement in the United Arab Emirates.

The new decree-law extended the timelines available for anyone to object to decisions issued by the Federal Tax Authority (“FTA”) as well as the timelines for the authority to issue its decision on the disputed case. Changes to the conditions for submitting objections and appeals were also presented by the decree-law. These changes have been made effective from November 1, 2021

The new decree-law facilitates tax registrants to submit requests for reconsideration and objections to FTA’s decisions, to implement Tax Dispute Resolution Committee (TDRC) decisions, appeal procedures and controls. To reduce administrative fines, pay fines in installments, and exempt penalties.

 

Summary of the changes:

 

The following amendments to the Tax Procedure Law were introduced by the Decree-Law, which entered into force as of November 1, 2021

1. Extension of timelines related to the settlement of tax disputes

Amending Articles (27, 30, 33) of the Tax Procedures Law as follows:

Reconsideration Request Procedures (Article 27): Timelines for requests for reconsideration have been expanded; Taxpayers now have 40 business days instead of 20 business days from the date of the FTA’s decision to submit an application, and the FTA has 40 instead of 20 business days to review the application and issue a response. This provides taxpayers with valuable additional time to determine if they should proceed with the review, and to give due consideration to their arguments.

Procedures for Submission of Objections and Cases of Inadmissibility (Article 30): Upon receiving a response to a reconsideration request, the taxpayer now has 40 business days instead of 20 business days to file an objection with the Tax Dispute Resolution Commission (TDRC). Again, this is a welcome extension to allow additional time to draft orders. In particular, clients are strongly advised to seek expert tax advice in such submissions, and the extension of the deadline should support in making this possible.

Appeal procedures before the courts (Article 33): The time frame for a person and authority to file an appeal against a TDRC decision before the relevant court has been extended to 40 working days (previous schedule of 20 working days).

2. Amending the conditions for submitting objections and appeals

Amending Articles (30, 33) of the Tax Procedures Law as follows:

Conditions for Submission of Objections to Committees (Article 30): The requirement to settle taxes and penalties prior to filing an objection to the FTA decision was amended to include only tax settlement (and no longer penalties).

Thus, when an objection is filed with the TDRC, the settlement of the fine amount in question is no longer required (only the tax amount must be settled). Earlier, in order to file an objection with the TDRC, the applicable tax and penalty amount must have already been settled. The requirement to pay for the transition to TDRC has been one of the challenges of appealing FTA decisions, so this amendment will help companies impose material penalties for transitioning to TDRC.

3. Conditions for submitting an appeal to the courts (Article 33)

A new provision has been introduced in Article 33 to provide for cases in which an appeal is inadmissible. This consists of failure to issue evidence that at least 50% of the value of the prescribed administrative penalty has been paid by the taxpayer in the favor of the authority either through cash or a bank guarantee.

4. Enforcement of TDRC' decisions

Amending Article 32 of the Tax Procedures Law as follows:

1. Dispute Resolutions issued by the Dispute Settlement Authority exceeding AED 100,000 are considered as exclusion instruments if they are not appealed to the relevant court within 40 working days from the date of notification of the outcome of the objections (previous time schedule of 20 working days);
2. If the parties to the dispute are federal or local government entities, the Council of Ministers shall issue a decision adopting an alternative objection and appeal mechanism. Until then, the current mechanism shall apply;
3. A new committee shall be formed by a decision of the Council of Ministers in the future, which may issue decisions approving the payment of fines in installments, waiver of fines or refunding them in whole or in part.