Key Update On The Amendment Of Tax Procedure Law And Tax Public Clarification

The recent amendment made to Federal Law No. 7 of 2017 on Tax Procedures (‘Tax Procedures Law’) is evident that increased impetus is provided by the Government of UAE to encourage business friendly environment in UAE, remove possible obstacles against it and at the same time promote increased compliance of Taxation Laws of UAE.

Federal Tax Authority (FTA) issued The Federal Decree-Law No. 28 of 2021 on September 16, 2018, to amend the Tax Procedures Law. The said amendment is effective from November 01, 2021. The FTA also issued Tax Procedures Public Clarification (TAXP003) to clarify certain aspects related to the implementation of amended provisions of Tax Procedures Law.

Provided below are key highlights of the subject amendment:

  • Mechanism and requirements for objection and appeal by taxpayers

The amended tax procedure provides following benefit to taxpayers

  • Extension of timelines:

A person may object or appeal against an FTA decision within the extended timelines provided hereunder:

Sr. No. Matter Before Amendment After Amendment
1 Time limit to file a reconsideration request before the FTA 20 Business Days 40 Business Days
2 Time limit for a reconsideration request to be reviewed by the FTA 20 Business Days 40 Business Days
3 Time limit to file an objection to the FTA’s decision before TDRC 20 Business Days 40 Business Days
4 Time limit to raise an appeal to the decision issued by the TDRC’s decision before the competent Court 20 Business Days 40 Business Days
  • Easement of requirements to settle penalties:

The relevant amendment for providing easement of requirements to settle penalties has been summarised below:

Sr. No. Matter Before Amendment After Amendment
1 Requirement to settle tax and Penalties before filing objection with TDRC Settlement of all tax and penalties involved Settlement of only the tax amount involved
2 Requirement to settle tax and penalties before filing appeal with competent court Settlement of all tax and penalties involved, as increased by decision of following level  

·         Settlement of all tax involved, as increased by decision of following level

 

·         Settlement of at least 50% of the penalties involved, as increased by decision of following level

 

Further, FTA has also provided an alternative to taxpayers that they may provide a bank guarantee in favour of FTA for the settlement of taxes or penalties in this regard. Detailed guidance on the same will the published by FTA in due course.

  • How PKF can Help

Since the introduction of the Value Added Tax in United Arab Emirates from the year 2018, FTA has issued several VAT Guides, Public and Private clarifications, Business and Taxpayer Bulletins apart from conducting various Tax Awareness Sessions and Tax Clinics to ensure Businesses comply with the Tax legislation.

Considering the above and considering further relaxation on penal provisions as well as tax procedures to settle disputes provided by FTA, it is important that businesses ensure full compliance of the VAT provisions to avoid future tax disputes or litigation matters with FTA.

In this ever-changing business eco-system, where companies are exploring new ways of conducting business coupled with the evolvement UAE VAT tax Laws, businesses must proactively review their tax positions as a priority.

The much-experienced tax team of PKF UAE, including an FTA certified tax agent, can support established businesses in UAE as well as the ones seeking to establish presence in UAE to comply with the UAE VAT requirements. Below is illustration of various type of UAE VAT services provided by PKF UAE:

  • Tax Registration, Amendment, Deregistration
  • VAT Implementation Services
  • Assistance in preparing and filing of returns, voluntary disclosures, and tax payment
  • Transaction Analysis
  • Diagnostic reviews and health checks
  • Represent and / or liaison with relevant authorities on taxation matters
  • Tax Agency Services
  • Training or Change Management Services
  • Assistance in handling tax disputes and litigations

Contacts

You may email us or contact any of our team members relating to your queries on this subject:

Stany Pereira Sarika Dhameja Mradul Gupta Gaurav Verma
Managing Partner Associate Partner Manager Assistant Manager
stany@pkfuae.com sdhameja@pkfuae.com mgupta@pkfuae.com gverma@pkfuae.com

 

Disclaimer:

This document has been prepared as a general guide. It is not substitute for professional advice. Neither PKF UAE nor its partners or employees accept any responsibility for loss or damage incurred because of acting or refraining from acting upon anything contained in or omitted from this document. PKF UAE is a member firm of the PKF International Ltd family of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member or correspondent firm or firms.