Timelines for objection and appeal

In order to grant taxpayers a wider window of opportunity to object to the FTA‘s decisions regarding that taxpayer, the timelines for objections and appeals have been extended as follows:

Application for reconsideration:

Based on the amendment, any person may submit the application for reconsideration within 40 business days from the date the person was notified of the FTA’s decision in connection with the person. Before the amendment, the person had to apply within 20 business days from the date the person was notified of the decision.

Issuing the reconsideration decision:

Based on the amendment, the FTA shall issue a decision on the reconsideration request within 40 business days from the date of receiving the application. Before the amendment, the FTA was bound to issue the decision within 20 business days.

Objecting to the Tax Disputes Resolution Committee (TDRC):

Based on the amendment, the person shall submit the objection to the reconsideration decision within 40 business days from the date of being notified of the reconsideration decision. Before the amendment, the person had 20 business days from the date the person was notified of the reconsideration decision to object against the reconsideration decision.

Appeal before the competent court:

Based on the amendment, the final decisions of disputes exceeding AED 100,000 are considered executory instruments if they were not appealed, by the person or the FTA, before the competent court within 40 business days from the date of notification of the TDRC decision. Before the amendment, the final decisions of the same value would have been deemed as an executory instrument if they were not appealed to the competent court within 20 business days from the date of notification of the TDRC decision.

The requirement to Settle Penalties – TDRC

Before the amendment, persons were required to pay all relevant outstanding taxes and Penalties related to the matter before being eligible to lodge an objection with the TDRC.

From 1 November 2021, persons may submit an application to the TDRC despite not having paid the Penalties imposed, as long as the full amount of tax has been settled, as well as all other conditions are met.

The requirement to Settle Penalties – Competent Court

Before the amendment, persons were required to pay all relevant outstanding taxes and Penalties before being eligible to lodge an objection with the TDRC.

According to the amended Tax Procedures Law, as a prerequisite to appealing before the competent court, the person shall submit, among others, proof that:

• The full amount of tax, as determined by the decision being challenged (i.e. the amount of tax as determined by the decision of the TDRC or the competent court issuing the decision that the person is now challenging before the higher competent court), was paid. The amount of tax will, therefore, differ where the decision of the courts on the matter change. Hence, where the amount of tax as decided by the TDRC or the competent court increases as per the decision of the following levels, the person is required to pay the difference before being eligible to take the matter to the higher competent court; and
• At least 50% of the Penalties, as determined by the decision being challenged (i.e. the amount of Penalty as determined by the decision of the TDRC or the competent court issuing the decision that the person is now challenging before the higher competent court), was settled. The amount of Penalties, just like the tax amount, will differ where the decision of the TDRC or the courts on the matter change. Hence, where the amount of Penalties as decided by the TDRC or the competent court is increased by the higher competent court, the person is required to pay 50% of the increase before being eligible to proceed to the next level.

Penalties can be paid directly to the FTA through the person’s e-Services account. Alternatively, the person may provide an approved bank guarantee in favor of the FTA. The FTA will be publishing detailed guidance relating to the bank guarantee process at a later date.

In case any of the above-listed requirements are not met, the appeal will not be accepted.

Penalty installment, waiver, and refund

As per the Tax Procedures Law amendment, the Cabinet will issue a decision detailing the controls and procedures based on which a new committee may approve payment of Penalties by installments, or full or partial waiver or refund.

This new committee will be established and chaired by His Highness the Chairman of the FTA or his deputy and will include two Board Members of the FTA.

The new committee may issue a decision:

• approving the Penalties to be made in installments;
• to waive Penalties in full or part; or
• to refund Penalties in full or part.

Consequently, any requests that are received by the FTA to Waive Penalties or to pay Penalties in installments, will only be processed once the Cabinet Decision stating the controls and procedures is enacted. Further information on such controls and procedures will be issued by the FTA in due course.

NewsCourtesy: The Tax Hub

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