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VAT Penalty Reconsideration in UAE

The United Arab Emirates (UAE), the Federal Tax Authority (FTA) is the regulatory body for UAE VAT Laws and assumes responsibility for overseeing and collecting federal taxes and fines. The UAE Federal Tax Authority (FTA) has the definitive right to fine any company for infringement of Article (25) of the Federal Law No. (7) Of 2017, Administrative Penalties Assessment, which incorporates Tax Evasion, Late Registration for VAT, Deregistration, Failure to file VAT Returns inside the time span, Submission of wrong documents or incorrect data, No proper records. To err is the human nature, in like manner the when the company realizes that they are not entitled for any such penalties, at that point, according to Article (27) of the Federal Law No. (7) Of 2017, the company can present a penalty reconsideration request within 20 working days of the issuance of the penalty. The authority is prepared to review its decision and give relief to the taxpayers in the event that they prove the case by petitioning for UAE VAT Reconsideration.

The UAE VAT reconsideration application can be submitted on the web, in Arabic to authority appealing the authority to survey the review and reverse the penalty in the FTA website, under the tab “E-Forms” then “reconsideration Form”. At the point when an company submits a penalty reconsideration request, it should prepare an official letter that discloses the case identified with the infringement and penalty, alongside the reasons wherein a same penalty ought to be reversed. And all documents related to the company and the authorized signatory, such as, company trade license and owner’s passport & Emirates ID copies, in which every one of these documents will be requested while submitting the penalty reconsideration request.

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The FTA will review its decision and facts of the case and issue new decision within 20 working days from the receipt of the application. The Authority will inform the applicant regarding its choice inside five business days of issuing the decision. The authority can either expel the penalties imposed or can stand up of holding the penalty which relies upon case to case premise.

On the off chance that person is not satisfied with the decision taken by the FTA considerably in the wake of submitting the VAT Reconsideration Form, in such conditions the case can be taken to the Tax Dispute Resolution Committee (TDRC). An objection can be raised if the VAT reconsideration request is dismissed by the authority to the TDRC within 20 business days from the date of notification as under Clause (1) of Article (31) of the Federal Law No. (7) Of 2017. It is to be noted now that the penalty levied must be settled so as to move to the TDRC from the FTA. The committee will review the case again and settle on a decision within 20 working days from the date of receiving the objection. In specific circumstances, the committee will extend the time span to an extra 20 business days if the authority finds any reasonable facts about the case, as under Clause (2) of Article (31) of the Federal Law No. (7) Of 2017.

The TDRC’s decision will be conclusive if the penalty amount or the tax payable is less than AED 100,000. As under Article (32) of the Federal Law No. (7) Of 2017, the individual who has the penalty, more than AED 100,000 and wants to challenge the decision of the committee can approach the competent federal court within 20 working days from the date of notification of the objection. When such decision which surpass AED 10,000, if not tested challenged before the competent federal court, at that point it will be enforced through the execution judge at the Competent Court as indicated by the Civil Procedure Law.

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Article (33) of the Federal Law No. (7) Of 2017 states that the FTA and the Person may challenge any of the TDRC’s decision before the Competent Court within 20 working days from the date of notification of the objector thereof. Challenges might be made to the Competent Court in the following instances, (1) an objection to the whole or part of the decision of the committee; (2) Non-issuance of a decision by the TDRC regarding an objection submitted to it in accordance with the law. The decision made by the Competent Court after a challenge was made to them by either the FTA or the Person, is deemed to be final and to be executed.

If the Competent Courts upholds the appeal against the decision of TDRC, then the penalties would be ordered to be refunded to the Taxpayer. Then the taxpayer may apply for a refund of Administrative penalties under Article (34) of the Federal Law No. (7) Of 2017 and according to Article (35) of the Federal Law No. (7) Of 2017 the Authority would refund the same according to the procedure and provisions in the Executive Regulation as under Article (53) of the Federal Law No. (7) Of 2017.

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In a recent decision by the Abu Dhabi Court of First Instance, which was effectively obtained by Baker McKenzie Habib Al Mulla in favour of a UAE based company, the Court upheld an appeal against fines and penalties of roughly AED 20 million imposed by the FTA in respect of a voluntary disclosure made by the company. The Court likewise ordered that the FTA reimburse the amount to the company. It is one of the first few successful tax appeals against a decision by the Tax Dispute Resolution Committee (TDRC) and also one of the first few tax appeal cases to be referred to court appointed experts.

Overview/ Map of the Procedure

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