UAE Tax Law Update: Now Appeals Can be Made to FTA for Violations

The UAE Federal Tax Authority (FTA) has announced that any person or group that has violated any provision of the tax legislation has the right to apply to the FTA for a reduction or exemption from administrative penalties, provided that the apology is acceptable to the FTA and there is evidence to justify the apology and that any violation will result in the imposition of an administrative penalty.

The FTA has 40 working days from receipt of the application to make its decision on whether to waive or reduce the administrative penalty. A tripartite committee established after the decision of the Director-General of the Free Trade Agreement to examine, accept, or reject the apology provided for in the Free Trade Agreement will decide on the reduction or exemption from an administrative penalty within 40 working days of receipt of the request. The UAE cabinet's decision to extend the deadline for taxpayers to appeal against the cancellation or reduction of the penalty imposed by the Federal Tax Authority is, according to tax experts, a postponement for companies.

In the backdrop of COVID-19, the UAE Cabinet had earlier decided to provide a reduction in VAT and Excise tax penalties for those who still have dues pending, via Cabinet Decision 49/ 2021. The above-mentioned move is in pursuance of Cabinet Resolution No. 51/ 2021, which came into effect on 28^th April 2021. This replaces Article (26) of Cabinet Resolution No. (36) of 2017 on the Executive Regulations of Federal Law No. (7) of 2017 on Tax Procedures.

Here, it has to be noted that the excuse submitted to the FTA in pursuance of reductions/ exceptions might get rejected if it is proven that the default has happened intentionally. A Committee constituted under the law will examine the acceptability of the excuse stated. The committee shall be a tripartite committee which will be formed by a decision issued by the Director-General of the FTA. The committee will be responsible for examining, accepting and rejecting the reasons stated, as per Article 1 of the Resolution. This is viewed to have an impact on the decisions by the Tax Dispute Resolution Committees (TDRC) or Federal Court decisions in this respect.