Dubai Court of First Instance Orders Dh723,500 Refund in Tax Fraud Case

A Dubai court has directed two men to jointly repay Dh723,500 to a company and its manager after finding them guilty of posing as officials of the Federal Tax Authority and carrying out a fraud using falsified documents. The court also imposed 5 per cent annual legal interest from the date the judgment becomes final until full payment, along with court fees and Dh1,000 in legal expenses. A separate claim seeking Dh12 million in compensation was dismissed due to insufficient evidence and failure to establish causation.

The ruling issued by the Dubai Court of First Instance stems from a related criminal case in which the defendants were convicted of fraud, forgery and use of forged documents.

According to case records, the accused contacted the manager of a company owned by one of the claimants, falsely claiming to be Federal Tax Authority officials. They shared confidential company details and presented forged approvals suggesting that tax reconsideration requests had been accepted and liabilities cleared. They further claimed they could resolve or reduce tax obligations through official procedures.

Relying on these representations, the manager transferred Dh723,500 to the defendants.

The court found that the accused had used forged government seals, a fake Federal Tax Authority stamp and an imitation official signature. They also accessed the company’s tax system and filed a false declaration showing a negative taxable amount intended to offset outstanding liabilities, effectively attempting to bring dues to zero.

This fraudulent filing triggered significant reassessments and penalties, with the company’s total tax exposure estimated at around Dh13 million, including Dh1.08 million in existing dues and Dh4.9 million in late-payment penalties. The company also suffered operational disruption, including suspension of its trade licence, freezing of bank accounts, vehicles and assets, and a halt to business operations affecting staff, clients and suppliers.

In the criminal proceedings, the defendants were sentenced to six months in jail, fined Dh723,500 jointly, ordered to surrender the forged documents and deported. The verdict was later upheld by the Court of Appeal and the Court of Cassation, making it final.

The civil court held that the criminal judgment was binding on the existence of the offence and the defendants’ liability. It therefore ordered repayment of the fraud amount with interest and costs.

However, the court rejected the Dh12 million damages claim, noting that civil liability requires clear proof of fault, damage and causation. Although a tax and accounting expert panel was appointed, the claimants failed to deposit the Dh60,000 expert fee despite being granted adequate time, preventing the assessment from moving forward.

With no expert report or supporting documentation on record, the court concluded that the larger losses remained unproven, limiting recovery strictly to the amount fraudulently obtained.

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