Key amendments to certain provisions of the tax procedural law in the UAE

published on 13 January 2022 | reading time approx. 3 minutes

Effective November 1st, 2021, the UAE Tax Procedure Law has been amended with respect to certain important provisions affecting the resolution of tax disputes. According to the Federal Tax Authority (FTA), the new procedural regulations thereby serve to implement Federal Decree No. (28) of 2021.

Among other things, the new Decree-Law made changes regarding the time limits related to the resolution of tax disputes, the requirements for filing objections and appeals, the enforcement of the decisions of the Tax Dispute Resolution Committee (TDRC) and established a special committee for possible tax remission.
In detail:

1. Extension of Deadlines

Amendment to Articles: 27, 30 and 33 of the Tax Procedure Law

With respect to the time limits for appealing an unjustified decision of the tax authority, the time limits of Articles 27, 30 and 33 have all been increased from 20 to 40 working days from the date of being notified.

Article 27 regulates the submission of a request for reconsideration against a decision of the tax authority, and the review period on the part of the authority has also been increased to 40 working days.

Article 30 regulates the possibility to submit an objection against the decision of the FTA to the competent Tax Disputes and Resolution Committee (TDRC) within an extended deadline of 40 working days from the date of being notified, whereas Article 33 regulates the possibility to challenge the decision of the TDRC in front of the competent court.

2. New Requirements for filing objections and appeals

Amendment to Articles: 30 and 33 of the Tax Procedure Law

In addition, the requirements for filing objections and appeals have also been amended, and a new group of cases has been created.

If, as of the entry into force of the amendments, an objection under Article 30 is filed with the Committee (TDRC), only the prior payment of the amount of tax initially due is now required for the objection to be effective, and not additionally the payment of the determined fine.

Furthermore, a clause has been added to Article 33, which describes groups of cases that result in the inadmissibility of the appeal to court. Accordingly, a court appeal is inadmissible if an appeal has already been filed with the TDRC, the leader of the appeal has failed to provide the FTA with proof of prior payment of the taxes in dispute and a payment of at least 50% of the administrative fines necessary for court action is not proven by payment via the customer´s e-services account or submission of a bank guarantee.

3. Enforcement of the decisions of the TDRC

Amendment to Article: 32 of the Tax Procedure Law

The amendment to Article 32 concerns the enforcement of decisions issued by the TDRC.

Accordingly, decisions exceeding the value of AED 100,000 will be considered enforceable (executory instrument) if they were not appealed at the competent court within 40 working days of notification of the outcome of the appeal. This doubles the previous time limit of 20 business days.

Where the disputing party is a federal or local government agency referred to in this resolution, the Cabinet, upon the recommendation of the Minister, shall issue a resolution adopting an alternative mechanism for objection and appeal, notwithstanding the provisions of Articles (29), (30), (31), (32) and (33).

4. Special committee for tax remission

Amendment to Article: 46 of the Tax Procedure Law

Most recently, Article 46 of the Tax Procedure Law was amended to establish a special committee for tax remission. As a result, future cases of remission, refund of taxes and installment payment of administrative fines will be reviewed and approved by a special committee . A separate decision of the Chairman of the Board of Directors of the FTA will determine the formation of the same committee, its rules of procedure and the manner of holding meetings for such cases.

In this regard, a Cabinet decision is now expected to specify the controls and procedures to be applied at the committee meetings, for example, when approving the installment payment of a penalty amount, waiving it in whole or in part, or refunding the penalty amount.

Effect

Overall, the amendments to the Tax Procedure Law represent a significant relief for taxpayers in the UAE, as both the extended deadlines for filing tax claims/appeals and the innovation that only tax amounts along with 50% of the penalties must be deposited in advance when filing appeals before the competent court at the time of a judicial action, facilitate the claiming process significantly being also less economically expensive.

All in all, the changes are intended to assist taxpayers in fulfilling their tax obligations and to enforce their rights through simple and transparent procedures, improve the efficiency of the tax system, and increase taxpayers' trust in the system.