Coming as a big relief for all the taxpayers, the UAE cabinet of ministers recently issued the Federal Law No. (7) of 2021 relating to the tax dispute and resolution in the UAE. This law has amended the provisions of Federal Law No. 7 of 2017. In this new law, some major changes have been introduced relating to the procedure of raising disputes against the decisions of the Federal Tax Authority (FTA). Further, some mandatory requirements for submitting objections and appeals have been relaxed.
Highlights of the new law
Following are some major highlights of the new law-
- Extension of timelines related to tax dispute resolution
- Before the amendment, the time limit to submit a reconsideration request against the decision of the FTA was 20 days, but now it has been extended to 40 business days. Further, the time limit for FTA to review the reconsideration request has been extended to 40 days. (Article 27)
- In the old law, for submitting an objection against the decision of the FTA before the respective Tax Disputes and Resolution Committee (TDRC), a person was provided with a time frame of 20 days. Now, it has also been extended to 40 business days. (Article 30)
- As per Article 33, the time limit to submit an appeal to the resolution committee’s decision before the competent court has been extended to 40 business days against the previous timeline of 20 days.
- Amendment in the requirements for submitting objections and appeals
Article 33 of the old law has been amended and a new clause has been inserted, which specifically provides for all the instances wherein an appeal will be considered inadmissible. These instances are as follows-
- The case is inadmissible from the very beginning and an objection cannot be entertained:
- If the concerned person fails to provide the proof of tax payment with the FTA:
- If the person fails to provide the proof of payment of not less than 50% of the administrative penalties by means of cash payment to the FTA.
- Jurisdiction of the Tax Dispute Resolution Committee (TDRC)
- Article 32 provides that the decision of the TDRC shall be considered as exclusionary instruments if it exceeds the value of AED 100,000 and not appealed before the competent court within 40 business days.
- If the interested parties are state or central government, the cabinet will issue an alternative mechanism for filing objections and appeals.
- Special waiver committee
Article 46 of the new law provides for the establishment of a special waiver committee. The committee is formed by a decision issued by the Chairman of the Board of the FTA. The committee has been assigned additional powers relating to the penalty or refund in a tax dispute. The committee shall be governed with the rules and regulations issued by the government. The Chairman of the board of the FTA and 2 board members will be a part of this committee.
This new law has come into effect from 1st November, 2021. Now, the taxpayers have 40 business days to raise any objection or dispute against the decision of the FTA, which will reduce the risk of slipping away the chance of disputing the penalties. The taxpayers have been given the much-needed flexibility in terms of settlement of taxes and penalties. If you are a taxpayer, and want to know further, you can contact us.