The Tax Procedures Law (Federal Decree-Law No. 7 of 2017) has been changed by the Federal Decree-Law No. 28 of 2021, which will take effect on November 1, 2021. Various changes have been made as a result of these changes, including an extension of the timeframe for submitting reconsideration applications to the Federal Tax Authority (FTA), procedural changes for submitting objections to the Tax Dispute Resolution Committee (TDRC), the appeals procedure before the Competent Court, the removal of the requirement to settle administrative penalties prior to submitting an objection to the TDRC, and the payment of administrative penalties.
The significant amendments to the Law are summarised here.
Article 27 – The deadline for filing a Reconsideration request with the Federal Tax Authority (FTA) has been increased from 20 to 40 business days. Similarly, the FTA’s decision-making period has been increased from 20 to 40 business days.
Article 30 – The time limit for submitting an objection to the TDRC against the FTA’s decision on the Reconsideration application has been increased from 20 to 40 days.
This amendment also states that the TDRC will not accept an objection in the following circumstances:
If a request for reconsideration was not made to the FTA in the first place;
If the tax owed in connection with the objection is not paid; and
If the objection is not filed within 40 business days after receiving notice of the FTA’s decision, it will be dismissed.
Businesses would benefit from a significant modification that requires them to pay only the disputed tax amount before registering an objection with the TDRC, as opposed to previous laws that obliged them to pay both tax and administrative fines.
Article 32 – The time limit for disputing TDRC rulings in front of the Competent Court has been increased from 20 to 40 business days.
Furthermore, if the disputed value does not exceed AED100,000 or if the TDRC judgement is not appealed to the Competent Court within 40 business days after notification of the outcome of the objection, the decision of the TDRC will be regarded final. The execution judge at the appropriate court carries out the final judgement of the TDRC, which has the power of a writ of execution, in line with the terms of Federal Law No. 11 of 1992.
Article 32 (bis) – As per a Cabinet Decision that has yet to be made by the Cabinet of Ministers, a new provision has been inserted under this amendment that provides that an alternate procedure of objection and appeal will be accessible for federal or local government organisations. Until the Cabinet Resolution is published and implemented, these entities will be subject to the existing provisions of the Tax Procedure Law regarding objections and appeals.
Article 33 – The time limit for filing an appeal before the Competent Court to contest the TDRC’s judgement has been increased from 20 to 40 days.
A new provision has been added with instances in which an appeal can be considered inadmissible, such as failure to file an objection with the TDRC within the specified timeframe, failure to provide proof of tax payment, and payment of penalties equal to 50% of the value of the administrative penalties prescribed in accordance with the committee’s deliberations.
Article 46 – If the FTA imposed or collected an administrative penalty from a person, a new committee, on the recommendation of the Director-General, issues a decision approving the payment of the penalty amount in instalments or the exemption or partial refund of the penalty amount, in accordance with the control and procedures issued by a decision of the Council of Ministers based on a suggestion by the Minister.
Businesses can now pay administrative penalties in instalments, subject to the committee’s approval.
The most recent modifications emphasise the importance of taxpayers carefully considering acceptable strategies for filing challenges with the TDRC and Competent Courts.
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