In the United Arab Emirates (UAE), the Federal Tax Authority (FTA) is the regulatory body for UAE VAT Laws and takes charge of managing and collecting federal taxes and fines. Being aware of the tax laws is always beneficial to business organizations and individuals. There are situations where the taxpayers are not satisfied with the decision given by the authority. In such cases, you may apply for UAE VAT Reconsideration.

The authority is ready to review its decision and give relief to the taxpayers if they prove the case by filing for UAE VAT Reconsideration.

What is the UAE VAT Reconsideration?

Any person who has received penalties can apply to the Federal Tax Authority (FTA)’s for VAT reconsideration within 20 working days from the receipt of such penalty.

Whether any objections can be raised to the FTA if penalties are imposed?

Yes, if you are not satisfied with the Federal Tax Authority (FTA)’s decision and if they have imposed any penalties, then you can file a VAT reconsideration request to the authority to review the decision made by the FTA.

How to Apply for VAT Reconsideration in the UAE?

The Federal Tax Authority is ready to review its decision on the levy of penalties on business entities. The UAE VAT reconsideration application can be submitted online to the authority appealing the authority to review the case and reverse the penalty. This application is to be submitted within 20 working days from the receipt of the penalty.

Any person who has received the penalty can submit UAE VAT reconsideration for any decision taken up by the FTA, and such an application must be submitted online in Arabic only.

How does FTA respond to the VAT Reconsideration filed?

The authority will review its decision and facts of the case and issue a new decision within 20 working days from the receipt of the application. The Authority will inform the applicant of its decision within five business days of issuing the decision.

The authority can either remove the penalties imposed or can take the stand of retaining the penalty which depends on case to case basis.

Applicable provisions of the Law

Article (27) of the Federal Law No. (7) of 2017 on Tax Procedures speaks about application and procedures for reconsideration

1. Any person may submit a request to the Authority to reconsider any of its decisions issued in connection to him, in whole or in part, provided that reasons are included, within 20 business days from him being notified of the decision.
2. The Authority shall review a request for reconsideration if it has fulfilled the requirements and issue its justified decision within 20 business days from receipt of such application. The Authority shall inform the applicant of its decision within five business days as of the issuance thereof.

VAT Penalties in the UAE

The authority may impose penalties if they come across a situation that has led to tax evasion from the taxable person in the UAE.

VAT Administrative Penalties in the UAE

These penalties are imposed by the Authority for non-compliance and breaching the provisions of this Decree-Law or Federal Law No. (7) of 2017 on Tax Procedures.

Tax Evasion penalties in the UAE

These penalties are imposed on persons who are involved in any kind of tax evasion ow lowering of the tax due illegally. 

What are the circumstances that invite VAT penalties in the UAE?

1. Late Registration for VAT
2. Late Deregistration
3. Failure to file VAT Returns within the time frame
4. Submission of wrong documents or incorrect information
5. No proper records

What are the Seven information’s required to file the VAT Reconsideration Form?

1. VAT Registration certificate
2. Emirates ID for the responsible person for registration
3. Passport copy for the responsible person for registration
4. Registered Mobile number and Memorandum of association to verify the authorized person.
5. The amount of penalty
6. The date of the penalty
7. A detailed summary of the case.

Based on all this information the VAT reconsideration can be filed. Also, note that this application and the supporting documents need to be submitted in Arabic only. There are no fines and penalties when submitting the VAT reconsideration form.

Example of UAE VAT Reconsideration 

ABC LLC a company registered in the tax group wanted to leave the tax group and register separately. However, in the process of applying for separate registration, they received a late registration penalty of AED 20,000/- from the Federal Tax Authority.

So, the UAE VAT Reconsideration was filed indicating the facts of the case to the authority. The authority has accepted the filed UAE VAT reconsideration and has reversed the penalty that was imposed.

What are the other options ahead if you are not satisfied with the FTA’s decision?

If you are not satisfied with the decision taken by the FTA even after submitting the VAT Reconsideration Form, then in such circumstances the case can be taken to the Tax Dispute Resolution Committee.

An objection can be raised if the VAT reconsideration request is rejected by the authority to the Tax Dispute Resolution Committee within 20 business days from the date of notification.

However, you cannot raise the objection to the committee in these two circumstances:

1. If the reconsideration was not filed with the FTA previously
2. If the penalties levied by the authority are not settled

The committee will review the case again and make a decision within 20 working days from the date of receiving the objection. In certain situations, the committee will extend the time frame to an additional 20 business days if the authority finds any reasonable facts about the case.

The Tax Dispute Resolution committee’s decision will be final if the penalty amount or the tax payable is less than AED 100,000/-

Further, the taxable person who has the penalty of more than 100,000/- and wants to challenge the decision of the committee can approach the federal court within 20 working days from the date of notification of the objection.