As per Article (25) of the Federal Law No. (7) of 2017, the UAE Federal Tax Authority (FTA) always has the complete right to impose a penalty on any company it believes that it has committed any violation listed in the same article of the same law. In many cases, companies believe that they should not receive such penalties, and therefore, as per article (27) of the Federal Law No. (7) of 2017, the FTA has given the right to any penalized company to submit a penalty reconsideration request within 20 working days of the issuance of the penalty.
Penalty Reconsideration Request Submission
The form related to the reconsideration request is accessed through the FTA website, under the tab “E-Forms” then “Reconsideration Form”. When a company submits a penalty reconsideration request, it shall prepare first an official letter that explains the case related to the violation and penalty, along with the reasons in which the same penalty should be reversed. And then make sure that all documents related to the company and the authorized signatory are present, such as, company trade license and owner’s passport & Emirates ID copies, in which all these documents will be requested when submitting the penalty reconsideration request. As per the same article, article (27) of the Federal Law No. (7) of 2017, the FTA shall review the requests submitted to them and issue its justified decision of the cases within 20 working days from the receipt of the penalty reconsideration requests.
Rejection of Penalty Reconsideration Request
We have seen numerous cases where the penalty reconsideration requests were approved, and thus, reversing the penalties imposed initially by the FTA. In the meanwhile, we have also seen many other cases that the requests were rejected, and for justice to be achieved as much as possible, as per article (30) of the Federal Law No. (7) of 2017, any company receiving a rejection on its penalty reconsideration request has the right to object on the FTA’s decision, and raise the case to the “Tax Disputes Resolution Committee” (TDRC).
The TDRC is a committee formed by the Ministry of Justice, chaired by a member of the judicial authority and two expert members registered as tax experts. The TDRC shall immediately reject the application submitted to them in the following cases:
Clause (1) of Article (31) of the Federal Law No. (7) of 2017 states that the committee shall review the case submitted to them and shall make a decision related to it within 20 working days from the receipt of the request. Clause (2) of the same article of the same law states that the committee may extend the period for deciding on the objection for no more than 20 additional working days after the completion of the first 20 working days mentioned earlier.
If the committee decides that the objection is approved then the penalties imposed by the FTA are to reversed. While if the committee rejects the objection, its decision shall be considered and deemed as final if the total of the due tax and administrative penalty does not exceed AED 100,000.
Objection decision and the total tax and administrative penalty is over AED 100,000?
Article (32) of the Federal Law No. (7) of 2017 states that decisions issued by the TDRC which exceed AED 100,000 shall be deemed as executory instruments if they were not challenged before the Competent Court within 20 working days from the date of rejection of the objection and shall be enforced through the execution judge at the Competent Court pursuant to the Civil Procedure Law in the State.
Challenge before Courts
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 may be made to the Competent Court in the following instances:
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.
Ziad Khawaja – Fame Legacy DMCC
Tax Assistant Manager & Tax Agent, TAAN: 20040382